This follows the appointment of new heads to the Corporacion Venezolana de Guyana (CVG), the parastatal which holds the various aluminium plants and bauxite mines, and the Fondo de Inversiones de Venezuela (FIV), the Venezuelan Investment Fund, which oversees the privatisation programme, by the recently inaugurated President Hugo Chavez.
The new programme has already attracted the interest of leading international aluminium and base-metal producers, including Alcoa and Reynolds of the US, Pechiney of France and London-based but still predominantly South African Billiton.
All these companies have been holding talks in recent weeks with new CVG chief Clemente Scotto.
This programme marks the fourth attempt by Venezuela to privatise its aluminium assets.
Unlike the previous three attempts, this time the strategy is not to sell these assets in one large block, and not to sell all shares in them.
Instead, the different aluminium plants and bauxite mines are to be sold separately, and CVG will retain a shareholding in the companies, the idea being to achieve strategic partnerships with leading international corporations.
Whether CVG will retain only a minority share, or equality or even a majority is under discussion at the moment.
The first unit to be offered for sale will be Venalum, located in Cuidad Bolivar in the east of the country.
Venalum is both CVG’s biggest and best aluminium plant, and proceeds from its sale will be invested in another plant to upgrade it and make it more attractive to potential buyers.
Proceeds from the sale of that plant will then be used to upgrade the next, and so on, until the programme is complete.
CVG and FIV are both convinced that they are on the right course with this new strategy.
No date has been established yet for the conclusion of this process, but it is hoped that the sale of Venalum will be completed by the end of this year – according to the Venezuelan Embassy in Pretoria, CVG was expected to make an announcement on May 15 (after Mining Weekly closed for press) regarding the details of the Venalum privatisation process.
No base price has yet been announced for the Venalum plant, but the base price for all CVG aluminium assets in the third privatisation attempt last year was some US$1,5-billion.
Although businesspeople were concerned about then-presidential-candidate Chavez’s views on privatisation, since coming to office the new President has made it clear that privatisation will continue and that it is a priority for his administration.
In principle, the Confederacion de Trabajadores de Venezuela (CTV) – Venezuela’s counterpart to Cosatu – is not opposed to privatisation, but it is possible that individual unions representing workers in the aluminium sector may disagree, especially if they believe that privatisation will cost many jobs.
In fact, the CTV is currently debating the idea of participating in the privatisation process, by buying shares in the companies that will be sold.
President Chavez’s new administration has ‘hit the ground running’ and has launched a programme of radical economic and political reform.
At the beginning of May the Congress passed the ‘enabling law’ which permits the President to change the state’s economic regulations by decree.