Cement grab by Socialist Venezuela

Venezuela has seized foreign owned cement plants on Tuesday, a show of strength as President Hugo Chavez moves forward with a plan to make South America's top oil exporter a socialist society.

To cheers from workers gathered at the gates, Venezuela took control of installations belonging to Mexican giant Cemex on the dot of midnight after failing to reach a deal in cement nationalisation talks.

Chavez, determined to build a state-dominated economy in Venezuela, has already taken oil and telecommunications companies from private hands and is buying a large Spanish-owned bank and a steel company.

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

At Cemex's main Venezuelan plant in Pertilgete on the Caribbean coast government supporters sang the national anthem and waved the country's yellow, blue and red flag. State television showed images from another plant of supporters holding up the flag of Venezuela's communist party.

"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."

Chavez wants the cement companies, as well as a major steel plant he is buying from an Argentine group, to help meet the home-building and infrastructure goals his administration has struggled with.

After nearly ten years on office, Chavez also has an eye on key regional elections in November, where his coalition's control of the majority of states and cities is expected to be eroded as voters fed up with crime and corruption either turn to opposition parties or abstain.

Chavez has long won elections because of support for his economic policies and sharing of an oil bonanza among the majority poor.

Workers at the Pertilgete plant on Tuesday shouted: "That's the way to govern," reflecting the popularity of nationalisations among many Venezuelans.

As part of the cement takeover, 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.

The government said it paid $552 million ($NZ789.36 million) for an 85 percent stake in Switzerland's Holcim and $267 million for 89 percent of the shares in France's Lafarge. But Venezuela said Cemex was asking for too much.

Oil Minister Rafael Ramirez, said Venezuela would pay Cemex considerably less than the $1.3 billion it had sought for its local plants in compensation talks. Cemex's position is weakened by the expropriation.

"We respect private interests," Ramirez told dancing supporters in the crimson shirts associated with the government. "But no private interest can be above the interests of the people."

The move against Cemex's local unit 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.

Ramirez said the three private cement companies now moving into government hands would be merged into one operation controlling almost all of the sector.

He said the merger would reduce costs and increase efficiency, despite oil state Venezuela's history of bloated, poorly run government enterprises.