Latinnews Archive
Andean Group - 28 August 1981
INDUSTRY: Venalum boss under fire
Carlos Rodriguez Soto, the controversial president of Aluminio de Venezuela (Venalum), is clinging grimly to his job in the face of evidence that he has failed in his allotted task. Rodriguez Soto was brought in to head Venalum, despite a complete lack of experience in the aluminium industry, by Leopoldo Diaz Bruzual, then head of the concern's majority shareholder, Fondo de Inversiones de Venezuela (FIV). He was given the job of making the struggling company more efficient, but newlyreleased technical reports have found poor maintenance, supervision and raw material control.
These factors have been blamed for the potline failure in May, which knocked out 40 per cent of Venalum's productive capacity. The reports suggest that full production of 280,000 tonnes per year cannot now be reached for at least another two years, and that production should be scaled down to economise on electricity consumption, and give Venalum time to improve its operational efficiency.
The decision on Rodriguez Soto's future now rests with FIV, which has so far shown little inclination to sack him before his two-year term ends in March 1982. The Corporacion Venezolana de Guayana (CVG), on the other hand, would be only too glad to get rid of him, but CVG only has an 18.8 per cent stake in Venalum.
Venalum's boss is also trying to play off the foreign companies involved in the case. Showa Aluminium Industries, the largest of six Japanese companies which between them have a 20 per cent stake in Venalum, has offered to send 25 technicians to help with the start-up of the 250 damaged pots in October. Showa's technical report suggested improvements in Venalum's training schemes and operational procedures, but stopped short of backing Reynolds Metals, Venalum's technical adviser, in its dispute with Rodriguez Soto over management structure.
Rodriguez Soto claims that Reynolds should have seen the breakdown coming, and has demanded a payment of US$7m to cover repair costs. He also says that Reynolds should carry out a thorough overhaul of the plant under the terms of its technical assistance contract. The Showa report suggests that the potline failure could have been foreseen as far back as last November.
The Japanese are not, however, unconditional allies of the embattled Venalum chief. They have asked for a 30,000-tonne reduction in their 1981 quota of 160,000 tonnes of aluminium, because of abnormally high stocks at home, and have also requested changes in the contract basis, to take into account fluctuating prices on the world market. Talks are to continue in Caracas in September.
*The Venalum saga: CR-81-11; WR81-22 & 26, Latin Letter.
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