THE UNSUCCESSFUL PRIVATIZATION ATTEMPT OF CVG ALUMINIUM COMPANIES, 1996-1998

THE UNSUCCESSFUL PRIVATIZATION ATTEMPT OF CVG ALUMINIUM COMPANIES, 1996-1998

The privatization process of the Steel Company, SIDOR, was successful. The way in which the privatization process is carried out in the case of the aluminium companies in the years 1996-1998:

Senior government officials under President Rafael Caldera's administration, tasked with overseeing the privatization process, presented aluminium companies to potential investors as having minimal value. They justified this by emphasizing that selling these aluminium companies was imperative for the country due to the government's inability to finance the substantial investments needed to modernize the entities within the Venezuelan Aluminium Corporation, which were slated for privatization. They also cautioned that these companies would likely cease operations within a year due to their deteriorating condition, making them unattractive for acquisition or donation.

 

VENEZUELA: El sector del aluminio no tiene quien lo compre

VENEZUELA: Agresiva privatización acompaña plan de ajustes

Ejecutivo ratificó privatización de las empresas del aluminio para I trimestre de 1998

VENEZUELA: Comienza cuenta regresiva para privatizar el aluminio

FRACASA VENTA DE EMPRESAS DE ALUMINIO EN VENEZUELA

 

  

PLANT IMPROVEMENTS AND CONSTRUCTION OF THE V-LINE IN VENALUM 

The V-Line construction project and installation of all HAL-230 Hydro Technology cells were completed in early 1990s.

In the same way, the modernization project of complexes I and II was carried out with the following improvements:

• installation of busbar system for magnetic compensation of the cells

• alumina point feeding system

• aluminium fluoride system

• automated cell control system

• cell information and supervision system

• improvements were also made to the auxiliary systems of the cell rooms: cranes, material handling systems, gas treatment system for environmental protection

With the new line of cells, the V-Line, and with the modernization of cells in the Complexes, the Venalum reduction area was updated to the state of the art in reduction technology. Venalum was then preparing to reap the fruits of that investment since that decade. This technology, today, in 2023, is efficient, productive and above all profitable, not being far from the state of the art.

Additionally, improvements were made that should accompany the reduction process: in the carbon plant to introduce improvements in the anode quality, and in the casting room: furnaces, casting tables for the manufacture of cylinders for extrusion, among other improvements.

The year 1990 also served for the successful start-up, commissioning and performance of the Venezuelan Aluminium Reduction Technology, The V-350 Cell, designed by Venalum engineers, and whose purpose was the design of a CVG Venalum proprietary technology that serve as technology for new aluminium projects, both, for Venalum and for projects with international private investment in Venezuela, an initiative that was supported by the Minister of State and President of the Venezuelan Corporation of Guayana, Engineer Leopoldo Sucre Figarella.

 

Plaque of recognition of the Minister of State President of the Venezuelan Corporation of Guayana, Engineer Leopoldo Sucre Figarella on the startup of The V-350 Cell on June 9, 1990. Photo: CINTAL

  

Bauxilum is the company resulting from the merger in March 1994 of the Bauxite Mine, Bauxiven (created in 1979) and the Alumina Plant, Interalumina (created in 1977). 

Subsequently, Venalum, Alcasa, Bauxilum and Carbonorca were integrated into the Aluminium Corporation of Venezuela, CAVSA, holder of shares for the sale process of the companies.

In practical results, for the year 2005 CVG Bauxilum closes with a historical production record by producing 1,950,000 tons of alumina that year. Additionally, Los Pijiguaos bauxite mine reached a production figure of 5,927 millions tons or 98.8% of its installed capacity in 2006 (historical production record), demonstrating the optimal conditions of the refiner’s systems, as well as the technical and managerial capacity that Bauxilum had in almost all its history. At least, until that time.

As previously mentioned, CVG Venalum had undergone recent modernization at that time, incorporating new technologies in the construction of the V Line.

If it is argued that Venalum was in such a state of disrepair, why did the plant continue to operate at its full installed capacity of 430,000 tons per year a decade after the failed privatization process? Furthermore, it consistently achieved world-class levels of efficiency and productivity until 2008 when the power supply was suspended.

Between January 1998 and December 2008, Venalum generated sales revenues totaling approximately $8 billion USD ($8,000 million USD).

The operational circumstances of CVG Venalum, along with its management and administration, exemplified the substantial potential of the integrated aluminium industry when it is overseen and administered with a commitment to excellence.

In 1994, CVG Venalum’s Research and Development Team, simultaneously with its activities, dedicated itself to promoting the aluminium sector as one of the most important options to accompany oil in supporting the national economy, with the organization of the 1st. National Seminar of the Aluminium Sector, Sensa 94.

 

Publication Edited by CVG Bauxilum for workers in the Aluminium Sector

 

During the time of the privatization process, 1996-1998, CVG Venalum Research and Development Team focused on structuring a National Aluminium Plan, as well as on promoting the aluminium industry and the expansion of installed capacity. This work shows an important advance during 1999, and in the year 2000 the Research and Development Centre of CVG Venalum coordinates the representation of the Venezuelan Aluminium Sector in our National Pavilion at EXPO 2000 Hannover in Germany, and in the Aluminium Symposium 2000 in Puerto Ordaz.

In both events, the promotion of the country’s potential for the efficient production of aluminium is formally relaunched, thus reversing the smear campaign that had been maintained on this important link in the national economy. Likewise, the new Project of the V Line of CVG Alcasa, based on the use of National Technology, The V-350 Cell, is presented for the first time, also considering important aspects for the recovery of CVG Alcasa.

The image of the Venezuelan Aluminium Sector was again strengthened in 2003 through participations organized by the Research and Development Centre of CVG Venalum in the Aluminium and Energy Congress in South Africa, and the Congress of the Commodities Research Unit (CRU) in the United States, where the international community of the aluminium business was formally shown the new approach that Venezuela would be giving to the sector. In 2004, Venalum also participated in the TMS 2004 Congress (United States) where the CVG Venalum Expansion Plan, which includes the Sixth and Seventh Lines, is shared with the international community.

In 2004, at the request of Marubeni Corporation, a meeting was held between this corporation, CVG and CVG Venalum to discuss in Puerto Ordaz with the Japan Bank for International Cooperation (JBIC) about the financial proposal tentatively offered by Marubeni Corporation for the construction of the VI Line of CVG Venalum.

 

Banca japonesa quiere financiar proyectos de CVG

https://www.voltairenet.org/article122748.html

 

Venezuelan Aluminium Industry, C.A., CVG Venalum. In the background, the design of the capacity expansion project for lines VI and VII. Photo and Design: CINTAL

 

As demonstrated globally, a well-managed aluminium business never imposes an economic burden on the state. Through its revenue and savings, both in the short and long term, it ensures the coverage of all operational, administrative, and financial expenses, tax payments to the government, significant plant maintenance and enhancements, and possesses the financial strength to independently fund projects aimed at expanding production capacity, fostering growth, and diversification.

 

Industria Venezolana de Aluminio, CVG Venalum, still in times of operational, technical, and managerial excellence.  Source: La Noticia, CVG Venalum, Año 2, Nº 04, Enero-Febrero de 2003

  

 

CONCLUSIONS

The Guayana Development Programme stands as compelling evidence of an exceptional development planning initiative closely tied to the advantages presented by the hydroelectric potential of the Caroní River. This methodological framework should be applied across all productive and service sectors, encompassing areas such as food production, agriculture, livestock, fisheries, iron and steel, forestry, mining, high technology, and more.

Given our current circumstances, it is imperative that we seek the guidance and leadership of Dr Miguel Rodríguez in structuring the Economic Recovery and Transition Plan. Dr Miguel Rodríguez's economic adjustment program, proposed and implemented in 1989, aimed to refinance external debt and prevent Venezuela from facing bankruptcy. This initiative achieved remarkable success, resulting in a substantial reduction in inflation and fostering an impressive 9% year-on-year GDP growth within just three years. This achievement stands as a unique and unparalleled success story in the history of the Venezuelan economy.

The vision of economist Dr Miguel Rodríguez, which envisions Venezuela as a major exporter of products from various productive and service sectors, should serve as our guiding light in the process of planning for sustainable development. This vision necessitates the implementation of policies that drive essential structural changes within the oil sector, as well as other sectors of the economy with the potential to become prominent export sectors.

Significant efforts have been made in Guayana to instigate substantial structural changes that could potentially transform Venezuela into a high-growth economy, leveraging its available resources to emulate the successes achieved by Japan, South Korea, and China.

Thanks to Dr Miguel Rodríguez's adept management, the Lower Caroní Development Programme saw significant acceleration. All available resources were directed towards the completion of Macagua II. Dr Miguel Rodríguez masterminded the comprehensive investment plan for the Caruachi Hydroelectric Power Plant. With the Tocoma Hydroelectric Plant in operation, we would have had a minimum of two reduction plants, each capable of producing over half a million tons of aluminium annually, complementing the full production capacity of Venalum and Alcasa, as well as the entire aluminium supply chain established in Venezuela.

This presented a remarkable opportunity to fortify Venezuela's Sustainable Development for good. These two remarkable and iconic figures, Dr Miguel Rodríguez and Eng Leopoldo Sucre Figarella, formed a formidable team, reaffirming and ensuring the continued validity of the Guayana Development Programme. This programme bestowed upon the country immense strength as it approached the 21st century.