Venezuelan President Hugo Chavez signed a law to formally take control of the country's biggest steelmaker from Luxembourg-based Ternium SA.

Mining and Basic Industries Minister Rodolfo Sanz will take over as president of Ternium subsidiary Siderurgica del Orinoco, known as Sidor, Chavez said today in comments broadcast by state television. The president named a commission to oversee the transition of the company by June 30.

The Venezuelan government, backed by surging oil revenue, is seeking greater control over the private sector through nationalizations, as Chavez tries to deepen the country's transition toward a socialist economy. Last year, the government took over Venezuela's largest telephone and electricity companies as well as four joint oil ventures, and announced the nationalization of the cement industry April 4.

"It isn't about Sidor returning to what it was when it was privatized,'' Chavez said. "Sidor has to convert itself into a socialist company.''

Venezuela is still in talks with Ternium over how much compensation it will pay. Sanz has said the government values the company at $800 million, while Chavez has said Ternium is seeking between $3 billion and $4 billion.

Tax Probe

The government is currently investigating worker claims that the company evaded paying taxes while it was in control of Sidor, Chavez said today. Gustavo Pernalete, Ternium's spokesman in Venezuela, couldn't be reached to comment.

Ternium, which is controlled by the Argentine-Italian Techint group, owned 60 percent of Sidor before the nationalization. Ternium Chief Executive Officer Daniel Novegil told Buenos Aires-based daily Clarin on May 4 that the company was interested in maintaining a stake in Sidor.

Ternium shares rose 9 cents, or 0.24 percent, to $37.64 in New York trading today.

Chavez said he wants state oil company Petroleos de Venezuela SA to invest in the steelmaker to begin production of pipelines in the 'medium term,' saying PDVSA, as the company is known, will need ''all the tubes in the world.''

Sidor and PDVSA will form a joint venture called the Corporacion Siderurgica Venezolana, Chavez said.

Last year Sidor produced 4.3 million metric tons of liquid steel, a 4 percent increase from 2006, according to its annual report. The company had sales of $2.4 billion.