Ternium's Parent to File Complaint Against Venezuela (Update1)

By Diana Kinch

Aug. 28 (Bloomberg) -- The parent company of Ternium SA, whose Sidor steel mill was nationalized by the Venezuelan government this year, will file a complaint with an international tribunal after negotiations stalled last night.

Talks between Ternium SA and the Venezuelan government are at an ``impasse,'' said Fabio Steinberg, a spokesman for Techint Group, which owns a controlling stake in Ternium. Techint will file the complaint with the World Bank's International Center for Settlement of Investment Disputes, he said.

Venezuela is refusing to agree to some demands made by Ternium, President Hugo Chavez said yesterday during a televised cabinet meeting. The company wants to be indemnified against lawsuits and immediately receive compensation in cash for the Siderurgica del Orinoco steel mill, known as Sidor, Chavez said.

``Chavez's tone has hardened,'' Steinberg said today in a telephone interview from Sao Paulo. ``He's threatening total expropriation of Sidor. It's an impasse.''

Chavez said Aug. 5 that Luxembourg-based Ternium would probably maintain a stake in Sidor, Venezuela's largest steelmaker. The government seized Ternium's 60 percent stake in the mill this year, part of a wave of nationalizations in what Chavez calls ``strategic'' sectors of the economy. The Sidor mill produced 4.3 million metric tons of crude steel in 2007.

Techint will ask the tribunal to help it reach an accord with Venezuela or issue a ruling on financial compensation, Steinberg said.

Othon Diaz, Ternium's institutional relations department spokesman in Monterrey, Mexico, declined to comment.

Ternium fell 42 cents, or 1.2 percent, to $33.65 at 2:27 p.m. in New York Stock Exchange composite trading. The shares have climbed 16 percent in the past year.

To contact the reporters on this story: Diana Kinch in Rio de Janeiro dkinch1@bloomberg.net