By Esteban Israel | REUTERS

The number of foreign companies operating in Cuba has continued to decline and a new investment expected from China has not materialized, a Cuban cabinet minister said Monday.

Joint ventures between Cuba’s communist state and foreign investors fell to 236 at the end of 2006, down from 258 a year ago and 313 at the end of 2004, Foreign Investment and Economic Cooperation Minister Marta Lomas told Reuters.

“We ended the year with 236,” she said after a meeting with Prime Minister Aristides Gomes of Guinea Bissau.

“We are not interested in doing too many (joint ventures), we are only interested in those that have an impact on the economy,” she said.

China is not pursuing a planned $500 million investment in producing ferro-nickel – an alloy using in making stainless steel – with Cuba, and Cuba intends to develop the project with Venezuela, she said.

Cuba opened up to foreign investment after the demise of the Soviet Union in 1991.

But unlike other communist-run countries like China and Vietnam, it has tightened rules for foreign investors in recent years and closed down ventures it considered of little value.

Since 2004, Cuba has given priority to partnerships with major foreign investors in key sectors such as energy and mining, and it has looked to its main allies Venezuela and China for investment.

China’s state-owned Minmetals agreed in November 2004, during a visit to Havana by China’s President Hu Jintao, to invest $500 million in Cuba’s nickel industry. Cuba expected a joint venture to produce 68,000 tons a year of ferro-nickel would come on stream in 28 months.

But Lomas said the project was not going ahead. “The Chinese are not continuing; we are redoing the project with Venezuela,” she said.

CUBA, VENEZUELA VENTURES

Cuba and Venezuela last week announced 16 new joint ventures including a fiber optics cable plan to bypass a U.S. trade embargo.

The largest two ventures, with a $1.1 billion investment, are a plan to build a steelworks in Venezuela and a ferro-nickel plant at Camariocas in western Cuba’s nickel producing area – the latter being the project that China backed out on.

Major foreign investors in Cuba include Canada’s Sherritt International in nickel, oil and gas, French spirits giant Pernod Ricard in rum, Spanish-French tobacco group Altadis , Swiss food giant Nestle in bottled water and soft drinks, and Sol Melia in hotels.

Cuba has encouraged its current Western partners to increase their investment rather than look for new investors.

Pernod Ricard joint venture Havana Club International last month opened a $66 million distillery for dark rum to increase production to 5 million cases a year by 2013.

Sherritt is expanding its nickel production joint venture by $500 million to raise output from 32,000 to 48,000 tons a year.