Magazine article Insight on the News

Cuba Evades Embargo Via Investment

Magazine article Insight on the News

Cuba Evades Embargo Via Investment

Article excerpt

As Congress acts to increase sanctions against Fidel Castro, U.S. allies are consummating multimillion-dollar investment initiatives with the island nation.

As Congress prepares to tighten the embargo against Cuba, America's principal allies -- among them Canada and Mexico -- are putting the finishing touches on major new deals with the island nation, including joint ventures worth hundreds of millions of dollars.

RBC Dominion Securities, the international investment-banking arm of the Royal Bank of Canada, has put together a $500 million partnership between Sherritt Inc., a major Canadian mining company, and Cuba's state-owned mining operation. (Cuba has the world's largest nickel deposit.

"Everything will be split 50-50 with the Cubans," says Nicholas C. Villiers, chairman of RBC Dominion Securities. "The mining and processing of cobalt and nickel will be done in Cuba and the refining in Canada." Cuba will get a 50 percent stake in the Alberta refinery and Sherritt 50 percent of the Cuban assets.

Australia's Western Mining Corp. is also party to a joint venture in nickel mining for what Australian prospectors believe will be an $800 million deal within three years.

In another initiative, the Mexican telecommunications conglomerate Groupo Domus has bought 49 percent of the Cuban telephone company with a commitment to spend $1.5 billion on development.

Domus was advised by N.M. Rothschild of the London-based Rothschild Bank. RBC, N.M. Rothschild and other international banking institutions have linked up to launch a $500 million Cuban investment fund. "We're in the homestretch," says one of the British bankers involved.

Three companies -- Premier and British Borneo of Britain and Total of France -- are exploring for oil in Cuba. Total struck oil in the first well drilled last month.

Unilever, the Anglo-Dutch giant, has gone into a joint venture with Suchel, Cuba's state-owned soap company. And the British sugar trading house, ED & FM Mann, has decided to invest an undisclosed amount in Cuba's anemic sugar industry.

Spain's Meliasol hotel chain is in the lead in building up the tourist industry From Varadero to the east of Havana to Palma City, some 10,000 new rooms have been built by Spanish, Italian and Mexican hotel chains. The number of tourists this year is expected to reach 750,000, 25 percent of them Canadian, the rest mostly European and Latin American. …

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