After Mexican marines occupied its facility this year, Vulcan Materials Co. is seeking the Biden administration’s protection from what it sees as the threat of a hostile takeover of the property by President Andres Manuel Lopez Obrador.
(Bloomberg) — After Mexican marines occupied its facility this year, Vulcan Materials Co. is seeking the Biden administration’s protection from what it sees as the threat of a hostile takeover of the property by President Andres Manuel Lopez Obrador.
The US construction firm decried what it called a Mexican government threat to declare its coastal Caribbean property a natural protected area or seize it by force unless the company accepts a bid that deeply undervalues the assets.
Birmingham, Alabama-based Vulcan said it learned through the press that the Mexican leader known as AMLO intends to acquire its 2,400 hectares (5,930 acres) of land south of the resort city of Playa del Carmen for $360 million. But in two letters seen by Bloomberg News addressed to the ambassadors of each nation, the company said it has only received an “inadequate appraisal” of the property, which includes the Punta Venado port and Sac Tun quarry.
The dispute is the latest in a string of confrontations with businesses that accuse Mexico of taking arbitrary and unfair decisions that hurt their interests and allegedly violate the rule of law. Earlier this month, AMLO’s government unilaterally restructured the way airport operators charge for their services, sending their stocks plunging.
“I am writing to request that you, the Department of State, and the United States government protect our employees and our property in Mexico by preventing retaliatory actions” by AMLO and his administration, Vulcan Chief Executive Officer Tom Hill said in the letter sent to US Ambassador to Mexico Ken Salazar. “We do not consider the appraisal a serious, good-faith negotiation or a reasonable attempt to fairly resolve the dispute.”
Vulcan shares initially rallied more than 2% to $207.94 on Thursday morning in New York, before paring those gains to close down 0.5% at $202.69.
A State Department spokesperson said the dispute is being managed institutionally through an ongoing trade arbitration panel, which is designed to fairly address disagreements. A spokesman for the Mexican Embassy in Washington declined to comment.
Lopez Obrador has said Vulcan is hurting the local environment and must be held to account. This month, he accused Calica — a Vulcan subsidiary — of causing “the greatest ecological disaster by a company in the Yucatan Peninsula” by violating environmental regulations in its extraction of limestone.
AMLO has taken a largely enigmatic approach to the business community. While Mexico has seen a surge in foreign investment, it’s been punctuated by moves such as seizing a stretch of rail line owned by a billionaire industrialist and ordering the cancellation of ongoing projects including an airport and a beer plant.
Vulcan has been in litigation and arbitration with Mexico since 2018 under the North American Free Trade Agreement, known as Nafta, which was later replaced with the US-Mexico-Canada agreement during the Trump administration.
Lawmakers from Vulcan’s home state of Alabama, reached for comment Wednesday, defended the company.
Republican Senator Katie Britt accused the Mexican government of trying “to bully this law-abiding American company out of the land and assets that it rightfully owns under Mexican law. “The result would be gravely detrimental to both Mexico and the United States, including jobs being lost and the American economy and supply chain for critical infrastructure projects being damaged.”
Republican Representative Jerry Carl said the moves against Vulcan “are completely unacceptable, and I urge the Biden administration to use every tool available to prevent Mexico from continued attacks against this American company that will greatly harm our two countries’ trade relations.”
‘Chilling Message’
The US construction firm alleged in March that Mexican armed forces took over its facilities at Punta Venado, creating a flashpoint for US-Mexico relations. Operations at Vulcan’s nearby quarry have been shut down since last year in a feud with AMLO, who accused the company of extracting materials without the proper permits and of committing “ecocide.”
Vulcan’s CEO defended its environmental record and cited international awards and its reforestation efforts.
“The mistreatment we have received from President Lopez Obrador and his Administration is inconsistent with our environmental and social track record, is contrary to Mexican and US rhetoric regarding cross-border relations, and should send a chilling message to other US companies considering nearshoring strategies,” Hill, who is also the company’s chairman, said in the letter.
“Vulcan is open to engaging in dialogue with Mexico to seek a fair, well-balanced solution and we will continue to follow the formal arbitration process being conducted under Nafta,” the CEO said.
(Updates with State Department response in 7th paragraph and freshens share move.)
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