Venezuela seizes cement plants in socialist drive

By Enrique Andres Pretel

GUANTA, Venezuela (Reuters) - Venezuelan soldiers and workers seized foreign-owned cement plants on Tuesday, a show of strength as President Hugo Chavez advances a plan to make South America's top oil exporter a socialist state.

Workers and soldiers poured into the plants alongside government officials as Venezuela took control of installations belonging to Mexican giant Cemex on the stroke of midnight after failing to reach a deal in cement nationalization talks.

Chavez, who has said he intends to build a state-planned socialist economy, has taken oil and telephone companies from private owners and is buying a large Spanish-owned bank and a steel company.

"Their time is up and they move into the hands of the state," Chavez said at a political rally late on Monday. "These are all steps towards socialism."

Despite losing a referendum last year that would have given him wider scope to remake the economy, the former paratrooper used decree powers to pass a package of laws in July granting the state greater powers to intervene in sectors such as food.

At Cemex's main Venezuelan plant in Pertigalete on the Caribbean coast, government supporters sang the national anthem and waved the country's yellow, blue and red flag. The plant was still operating.

Some wore shirts bearing the slogan "Now the cement is everyone's." State television showed supporters at another plant holding up the flag of Venezuela's communist party.

"Now the cement we produce will not make millionaires of some far-away men, it will be used for our houses, our infrastructure, our national development plan," said Energy Minister Rafael Ramirez, charged with overseeing the takeover, before dancing workers clad in red shirts.

The move against Cemex will further chill the investment environment in Venezuela, where companies enjoy fast growth from a consumer boom but face heavy regulations on prices and frequent government takeover threats.

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As part of the cement nationalization, Venezuela struck deals to buy majority shares in the local operations of European cement makers Holcim and Lafarge, following a pattern of usually compensating takeover targets well. But the government said Cemex was asking for too much.

Shares of Cemex on the Mexico stock exchange fell 2.83 percent on the news.

Venezuela says Cemex wanted about $1.3 billion for its local division, but on Tuesday said the company would now be lucky to get $400 million. Mexican diplomats formally asked Venezuela to restart talks with Cemex.

Chavez wants the cement companies, as well as a major steel plant he is buying from an Argentine group, to help quell criticism he has failed to meet home-building goals.

After nearly 10 years on office, Chavez also has an eye on key local elections in November, where his coalition's control of most states and cities will likely erode as voters fed up with crime and corruption turn to other parties or abstain.