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Friday, January 15, 2010
Today's News Headlines
* ANALYSIS: Have conflicts of interests caught Acepar in a smear campaign? - Paraguay
* Rialca signs up for aluminum transformation - Venezuela
* No new production line 5 for Alcasa under new business plan - Venezuela
* Construction will help iron and steel industry recover this year, says Camacol - Colombia
* Metal prices rise as concerns subside over tighter Chinese monetary policy - Regional
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Editor's Choice
* ANALYSIS: Have conflicts of interests caught Acepar in a smear campaign? - Paraguay
In early November last year, the government of Paraguay requested that an arbitration tribunal be set up to study the history of and circumstances under which state steelmaker Acepar (http://) was transferred to private control in 1997 in order to terminate or at least change the company's purchase and sale agreement.
Oddly, the decision to set up the tribunal was made despite the fact the company and the government had already reached agreements on issues such as how much the state would be paid for the plant and on Acepar's supposed breach of an agreement to be self-sufficient in the supply of charcoal.
Both parties had also agreed on the investments that Acepar would make, keeping all jobs and guaranteeing the supply of steel for the local metallurgical industry.
According to Acepar manager Néstor Méndez, the company had also received "all the guarantees and the encouragement it needs to continue investing in the country."
SUPPOSEDLY INTERESTED
In a recent interview with BNamericas, Méndez said that Chilean iron and steel manufacturer [2]CAP[/*2] was interested in taking over Acepar.
A group of legislators linked to the ruling party in Paraguay have also been holding meetings with Brazilian company Ciafal to stimulate interest in taking over the company, should Acepar be nationalized.
There is also major media pressure coming from local newspaper ABC, which is also interested in allying with Brazilian parties to take over the company.
Likewise, a group of socialist-leaning legislators are using the company as a rallying point to encourage President Fernando Lugo to take control of Acepar the way that Hugo Chávez and Evo Morales have done with companies Venezuela and Bolivia and show that the state can retake control of privatized companies.
CHANGING THE RULES
In another notable development, the agreement between Grupo Taselli, which controls Acepar, and the government of Paraguay was also changed.
According to the agreement, the US$29mn cost of purchasing Acepar was to be paid in five installments of all a little more than US$5mn plus interest each, with the last payment due on November 10, 2009.
"However, on November 10 we went to the national treasury to pay the last installment and the finance ministry told us that they would not receive the last payment and, of course, would not give us the stocks [which the government was withholding until all installments were paid], even if payments were completed," Méndez said.
He said that he could not fathom why the government suddenly changed its course, "and in light of how things played out, we believe that a number of officials might not be able to explain it either."
SMEAR CAMPAIGN?
The government decision to ask for the contract privatizing Acepar to be revoked leads to the conclusion that Acepar may be the target of a smear campaign.
This conclusion has stirred up suspicion that there is a group of people or organizations that will work, on different levels, to undermine the company, lead it into the most severe crisis possible and by doing so justify its re-nationalization and later re-privatization to one of the parties that have already expressed their interest.
Acepar, it seems, is caught up in the middle of a number of conflicting interests, with various parties wanting to getting a slice of a company which, according to its general manager, is quite healthy, has investments underway, wages up to date, social benefits unique in this type of company, and profits of more than US$13mn over the last few years.
By Harvey Beltrán
Business News Americas
* Rialca signs up for aluminum transformation - Venezuela
Venezuelan aluminum maker Rines de Aluminio (Rialca) is in the process of reconditioning its plant to start up aluminum transformation operations as part of the national aluminum development plan, Sintralcasa union leader José Gil told BNamericas.
"The plan is to develop the industrial aluminum complex, which also includes the companies Alucasa [Aluminios Carabobo] and [aluminum cable producer] Cabelum," he said.
Since Alcasa is focusing its business on aluminum transformation these companies will be receiving more metal to use in their production processes, Gil added.
However, an Alucasa union leader recently said that production there could fall by 40% because of the two production lines that were closed at state smelter Alcasa.
RIALCA
In May, President Hugo Chávez gave the nod to create state aluminum wheel company Rialca, citing financial losses and outdated technology as reasons for taking it out of the hands of its former owner, US company Alcoa (NYSE: AA).
Rialca is expected to fire up operations with aluminum products output of 3,000t/m.
The Rialca plant, located in Carabobo state, has two 25t furnaces and aluminum processing capacity for 16,000t/y.
By Harvey Beltrán
Business News Americas
* No new production line 5 for Alcasa under new business plan - Venezuela
Venezuelan state aluminum reducer Alcasa has decided not to build a production line 5 due to a new business strategy that focuses on transforming aluminum, Sintralcasa union leader José Gil told BNamericas.
"This [aluminum fabrication] is the business for the country and this is where the profits are," he said.
According to Gil, the company's vision has changed and now does not include the line 5 project that was proposed as a part of the previous strategy of producing and exporting primary aluminum.
"Now we plan to transform aluminum, since selling primary aluminum is not very profitable with such high production costs and low prices. Value can be added in transforming and so that's where the real business is," he explained.
In December the national government announced a series of measures designed to cut power use by 560MW at basic industry companies in Guayana region and Alcasa shut down production lines 1 and 2 as part of this plan.
After the announcement was made, the company started the process of permanently shutting down and dismantling the two lines, making upgrades in these areas and on another aluminum transformation line as well.
Closing down lines 1 and 2 will reduce total production by 20% since lines 3 and 4 combined have capacity of 168,000t/y out of Alcasa's total 210,000t/y.
State heavy industry holding company CVG controls 92% of Alcasa and the remainder is held by US aluminum producer Alcoa (NYSE: AA).
By Harvey Beltrán
Business News Americas
* Construction will help iron and steel industry recover this year, says Camacol - Colombia
Colombia's construction chamber Camacol is certain the national iron and steel industry will be back on its feet in 2010 thanks to the activity apparent in the construction sector.
In a study Camacol reported there was a 25% increase in construction licenses in 2009 and these projects are expected to get underway in the first half of 2010.
"In addition, the consolidation of a flat steel production plant was recently announced and this will help meet internal demand, which is currently quite high," Camacol said.
Iron and steel have become very important in Colombia over the last decade thanks in part to the strong performance of the construction sector. However, the iron and steel industry encountered a rough spot last year because of the international crisis and its impact on the emerging economy, the organization stated.
But now it looks like with the recent liftoff of the construction sector, with both civil works and building sales recovering well, the Colombian iron and steel sector should start performing better, the report said.
By Business News Americas staff reporters
* Metal prices rise as concerns subside over tighter Chinese monetary policy - Regional
The base metals complex and gold and silver traded in London rose Thursday thanks to the waning of concerns over the chance that China might tighten its monetary policy, according to the daily commodities report by Barclays Capital.
"Prices were firmer across the complex, as concerns over tightening in Chinese monetary policy diminished for now," said Barclays.
Copper on the London Metal Exchange (LME) rose to US$3.381/lb cash from US$3.353/lb the day before. Stocks rose 2,200t to 523,975t.
Prices for aluminum, nickel, lead, zinc and tin also were up Thursday.
Meanwhile on the London Bullion Market (LBM) gold rose to US$1,138/oz from US$1,127/oz and silver increased to US$18.58/oz from US$18.35/oz.
By Business News Americas staff reporters
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In-deph interview
* "It's sad to say this but scrap collectors, who gather inputs for the steel industry, are being pushed aside"
José Arévalo Jr
President
Cofarja
Brazil
http://www.bnamericas.com/interviews/metals/Jose_Arevalo_Jr_,Cofarja,/170073095
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Main companies covered in today's news
* Comisión Chilena del Cobre
http://www.bnamericas.com/company-profile/en/Comision_Chilena_del_Cobre-Cochilco/170073095
* Administradora de Fondos de Pensiones Habitat S.A.
http://www.bnamericas.com/company-profile/en/Administradora_de_Fondos_de_Pensiones_Habitat_S,A,-AFP_Habitat/170073095
* C.V.G. Aluminio del Caroni S.A.
http://www.bnamericas.com/company-profile/en/C,V,G,_Aluminio_del_Caroni_S,A,-Alcasa/170073095
* Doe Run Perú
http://www.bnamericas.com/company-profile/en/Doe_Run_Peru-Doe_Run_Peru/170073095
* Compañía de Acero del Pacífico S.A.
http://www.bnamericas.com/company-profile/en/Compania_de_Acero_del_Pacifico_S,A,-CAP/170073095
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