Venezuelan troops today seized control of Mexican cement giant Cemex's plants and offices in Venezuela as workers in the factory cheered and waved in approval, and handed over operational control to Petroleos de Venezuela S.A.to run on behalf of the government.

According to early reports quoting television channels in the region, Venezuelan President Hugo Chavez, accompanied by energy minister Rafael Ramirez,  and president of the state owned oil company Petroleos de Venezuela S.A. (PDVSA), are reported to have been present during the operation.

This move came after both sides failed to reach a deal in cement nationalisation talks. Cemex which accounts for half of Venezuela's total cement production had sought $1.3 billion compensation for relinquishing control of its Venezuelan operations, which the government thought was too high. In 2007, its Venezuelan operations contributed 4 per cent of Cemex's total earnings before interest, tax, depreciation and amortisation.

Now Cemex will have to settle for a deal considerably lower than the $1.3 billion it had sought. Earlier this month the Venezuelan government had issued Cemex with a tax bill of $37 million as the takeover talks hit rough weather.

If a reasonable compensation is given to Cemex then some analysts see a silver lining in the takeover as it would reduce Cemex's $19-billion debt that rose last year after its biggest takeover deal in which it bought Australian rival Rinker.

Earlier as part of the cement industry  nationalisation, Venezuela struck deals to buy majority shares in the local operations of European cement makers Holcim and Lafarge after a decree in June giving them 60 days to negotiate handover agreements that would give at least a 60-per-cent controlling share of each firm to the government, in a pattern that usually compensated takeover targets well.

The Venezuelan government had paid $552 million for an 85-per cent stake in Holcim of Switzerland and $267 million for 89 per cent of the shares in Lafarge of France, but negotiations with Cemex reached nowhere.

The Venezuelan administration has always struggled to meet the home-building and infrastructure targets for providing housing for the poor, and had accused Cemex of exporting too much of its local output that denied enough cement for domestic consumption.

Chavez, a socialist who aims to make the top oil exporter in South America into a "21st century socialist society" has already taken oil and telecommunications companies from private hands and is also acquiring a the Bank of Venezuela from its Spanish owners, Grupo Santander  and a steel company.

A former army paratrooper, who ame into prominence, as a leader of a failed coup in 1992, Chavez evokes a mixed response from Venezuelans between a majority who idolise him for speaking for the poor, and those who say he has become increasingly autocratic.

In the past year Venezuela had also seized oil projects in the Orinoco oil belt after negotiations failed but reasonable compensation deals were given to most of the companies.

This move against Cemex could put the investment atmosphere in cold storage for some time as companies face heavy regulations on pricing and takeover threats from the government although they do benefit from the fast growth of the consumer boom in Venezuela.

Caracas consultant Ecoanalitica has said that the recent nationalization spree undertaken by the government is likely to cost over $11 billion. The takeover of oilfield projects from Exxon Mobil and ConocoPhillips made ConocoPhillips to write off $4.5 billion and Exxon went on to sue for $12 billion.

The takeover bill for the cement companies may reach $3 billion and the proposed buying of Banco de Venezuela from its Spainish owners Banco Santander SA will cost $1.5 billion.