Cemex may escape Chavez's nationalization fling

By Chris Aspin

MEXICO CITY, Jan 10 (Reuters) - The Venezuelan operations of Mexico's Cemex could go unscathed in the country's planned nationalization spree, given the world's No. 3 cement maker has worked hard to please firebrand President Hugo Chavez.

Analysts see a slight risk for Cemex (CX.N) (CMXCPO.MX) because of Chavez's hazy nationalization plans, but many expect the Mexican company to escape because its operations in Venezuela had not been state companies that were later privatized.

"Cemex's cement operations in Venezuela have always been in private hands, so they should be safe; but this gentleman (Chavez) is capable of anything," said a Mexico City analyst who asked to remain anonymous.

The anti-U.S. leader, who plans to press a radical socialist revolution, said on Monday he would nationalize Venezuela's largest telecommunications firm CANTV TDVd.CR VNT.N and power companies.

Investors are worried Chavez could in the future take aim at other industries and companies.

Cemex, which has operations in more than 50 countries, stands out as a potential target because it is the Venezuelan market leader.

"Everything in Venezuela is a risk at the moment," said Carlos Hermosillo, analyst at Vector brokerage. "Could he (Chavez) hit out at Cemex? Yes, definitely."

But Hermosillo said the risk was low because Cemex has gone to the trouble to be on good terms with Chavez. In 2005, Cemex began offering cheap cement supplies to help the government fill a housing deficit.

"They did it to make a good impression with Chavez," Hermosillo said.

The country's largest supplier of cement and ready mix concrete, with three plants and a production capacity of 4.6 million metric tonnes per year, Cemex also has 33 ready mix plants in Venezuela.

The close proximity to the coast of its Venezuela operations allows Cemex to export Venezuelan-made cement to the United States, to the Caribbean and to Central and South America, Cemex says on its Web site.

Analysts say they do not expect Chavez to deem the cement industry as "strategic" -- unlike oil, power and telecommunications. Chavez's plans for a state cement company, a joint venture with Iran, also appear to dispel Cemex nationalization fears.

Cemex declined to comment on the political situation in Venezuela, which analysts say accounts for about 2 percent of Cemex global sales and 4 percent of core earnings before interest, taxes, depreciation and amortization (EBITDA).

Chavez started building his 1 million tonne per year state cement manufacturer in December 2005. Work is expected to be completed in 2008.

Investment in the plant has been put at $221 million, with an Iranian firm providing $196 million.