April 7, 2009: Venezuelan President Hugo Chavez says Japanese funders will lend state oil company PDVSA $1.5 billion for refinery improvements.
May 21, 2009: Venezuela President Hugo Chavez announces upcoming nationalization of all hot-briquetted iron plants in his country. This includes Comsigua, a 1.3 million-ton a year mill majority-owned by a group of Japanese companies.
June 23, 2009: Japanese government threatens not to guarantee the refinery loans. That would kill the loans. The two big concerns were that Japanese assets had been nationalized without any discussion of payment for their shares, and that Japanese suppliers to PDVSA were awaiting payment on long-overdue invoices.
Two years go by with the iron mill in decline. A Kobe Steel securities filing shows that the company lost money in 2008 and 2009, and that sales fell by half from the boom year of 2008 to 2010. At some point in late 2009, I checked with sources and found that the Venezuelan government hadn’t scheduled any meetings to discuss terms for buying Comsigua, even though the Japanese companies were eager to sell their shares in the now money-losing company.
June 25, 2011: Venezuela “acquired 73.3% of the outstanding shares of Complejo Siderúrgico de Guayana, C.A (Comsigua)…from several Japanese shareholders including Kobe Steel K.K. The purchase price for these shares was US$232.9 million, composed of a US$78 million down payment and ten semiannual installments of US$15.4 million each.”
June 28, 2011: Japan commits to the $1.5 billion loan.
Venezuela has a strict policy of paying book value for nationalized assets. The book value of Comsigua at the end of 2008 was $140.3 million, according to that Kobe Steel filing. So the book value of the shares that Venezuela purchased was $102.9 million. The Japanese shareholders got $232.9 million, or almost 2.3 times book value. Will ExxonMobil and ConocoPhillips get such generous settlements? How much depends on US government leverage?