Venezuelan opposition names symbolic metals board

Venezuela's political opposition is laying a foundation to revive the country's once-thriving aluminum and steel industries, in anticipation of its plan to install a transition government.

The opposition-controlled National Assembly this week approved the appointment of an "ad hoc" administrative board of exiles to oversee CVG International, a subsidiary of CVG, a state-owned holding company for heavy industries based in minerals-rich Bolivar state.

Assembly president Juan Guaido, who is recognized as Venezuela's interim head of state by most Western countries, appointed ad hoc boards to Venezuela's state-owned oil company PdV and its US subsidiaries, including refining unit Citgo, shortly after he declared his interim authority in January 2019.

The largely symbolic effort to assert authority over Venezuelan state assets has now shifted to CVG, which Caracas set up in 1960 to exploit iron ore, bauxite, gold and hydroelectric resources at a time when foreign oil companies still owned 100pc of the Venezuelan oil industry.

The new board members, who are not recognized by the disputed government of Venezuelan president Nicolas Maduro, have been tasked with auditing the operations and finances of the heavy industries and rebuilding commercial ties for the supply of raw materials and equipment.

The board chairman is veteran Venezuelan metallurgical engineer Enrique Castells, who oversaw construction of the 430,000 t/yr Venalum aluminum smelter in the early 1980s and has lived in the US and Europe since the 1990s.

Other board members include Ricardo Echeverria, a Venezuelan aluminum executive who worked with CVG International's aluminum sector from 1975-95, and Roberto Arredondo, who worked at Venalum from 1987-92 as a project coordinator and sales manager. Other board members are Dick Souki, a Bolivar state regional coordinator for the opposition Primero Justicia (PJ) party, and former CVG executive Fernando Goyeneche.

The Maduro government has denounced the opposition's CVG International appointments as another bid to rob state assets. The board is "illegal and its illegitimate members will be arrested on treason charges the moment they set foot in Venezuela," a presidential palace official told Argus.

Guaido's team has been more cautious in announcing appointments to its exile administration, following the withdrawal of prominent central bank appointee Ruth de Krivoy, who asserted in July that she had not been previously asked to participate.

"We're taking care to confirm that potential ad hoc board members are able to join the transition before their appointments are announced," the aide said. "We don't want to repeat the central bank debacle."

CVG's website indicates that CVG International has offices in Miami, Madrid and Puerto Ordaz in Bolivar state. Calls to these offices were not answered.

In the Maduro government, CVG falls under the industry ministry headed by Tareck El Aissami, an influential part of Maduro's inner circle who was an early target of US sanctions for drugs trafficking.

Since July 2018, El Aissami has oversight and policy-making responsibility for state-owned bauxite, aluminum and primary aluminum companies Bauxilum, Alcasa and Venalum.

CVG also controls the state-owned iron industry, including mining company Ferrominera Orinoco, steelmakers Sidor and Comsigua, and four hot-briquetted iron (HBI) producers in Bolivar.

Sidor, with a liquid steelmaking capacity of 5.1mn t/yr, has not produced any steel so far in 2019.

Venalum and Alcasa, with a combined nameplate capacity of 640,000 t/yr, have been shut down since a national blackout in March destroyed the last 73 operational aluminum smelting cells out of a total of 1,501.

Ferrominera Orinoco currently is extracting about 15pc of its 23mn t/yr iron ore mining capacity. Bauxilum's 6mn t/yr bauxite mine is operating at less than 10pc of capacity, and its 2mn t/yr alumina refinery has been shut down completely since 2017, according to the industry and national production ministry.

Petrochemicals push

In a related move yesterday, the National Assembly approved changes to the previously named ad hoc boards of state-owned petrochemicals producer Pequiven and its Colombian fertilizers subsidiary Monomeros Colombo Venezolanos.

Monomeros ad hoc board member Carmen Elisa Hernandez was named chair, a position held since last March by Venezuelan chemical engineer Jon Bilbao, who also heads Pequiven's ad hoc board of directors.

Other Monomeros ad hoc board members since last March include petrochemicals and finance executives Jose Alberto Deantonio, Jose Ignacio Gonzalez and Yadid Jalaf.

Pequiven's ad hoc board was expanded yesterday from five to seven members with the appointments of Florida-based chemical engineer Melvin Villafañe and financial adviser Andres Arevalo, a stakeholder in the Banco Occidental de Descuento financial group owned by Victor Vargas.

None of the board members are in Venezuela.