Venezuela not merging aluminum companies: sources

Mon Mar 9, 2009 12:07pm EDT

CARACAS, March 9 (Reuters) - Venezuela's reorganization of the aluminum sector will involve mainly administrative changes that will not involve the fusion of existing aluminum companies, an industry sources told Reuters on Monday.

President Hugo Chavez on Friday announced plans to create the Venezuelan Aluminum Corp to unify the sector, which includes Alcasa and Bauxilum, run by the state, and Venalum, 20 percent owned by Japanese companies.

The announcement sparked market jitters due to concerns the government may seek to consolidate existing companies or boost its control over the sector as Chavez launches new takeovers in the food sector.

"This is not a merging of companies. What they are doing is creating a corporation that centralizes policies toward the companies but without merging them, at least for now," said a source at one of the companies who asked not to be identified.

A source at the Mining Ministry said the government was seeking to improve coordination between the companies, which are currently struggling with outdated machinery, labor conflicts and lack of investment.

Chavez, who last week took over a unit of U.S. food giant Cargill [CARG.UL] and a tree farm owned by Ireland's Smurfit Kappa (SKG.I), said in the coming days the government would have an initial plan to "rescue" the industries.

Venalum is 80 percent owned by state holding company CVG, while the rest are distributed among Showa Denko KK (4004.T), Kobe Steel (5406.T), Sumitomo Chemical [SMCHMC.UL], Mitsubishi Materials (5711.T), Mitsubishi Aluminum and Marubeni (8002.T). (Reporting by Fabian Andres Cambero, writing by Brian Ellsworth)