Venezuela's Government will help build a $2.1 billion (Dh7.7bn) steel plant, President Hugo Chavez said.
He visited the work site in Venezuela's southeastern Bolivar state as heavy machinery began moving earth for the new plant.
Brazilian investors are also participating in the project along with the Venezuelan Government.
Chavez spoke at the site along with Mining Minister Rodolfo Sanz, who said the steel plant's construction will generate 7,000 jobs – and more than 1,500 jobs one the plant is operating.
The government will also create a state aluminium company called Corp Venezolana de Aluminio as it merges state-owned aluminium and bauxite companies, said Chavez.
Subsidiaries of Corp Venezolana de Guayana including Venalum, Alcasa and Bauxilum will be included in the reorganisation, Chavez said at the groundbreaking for the new steel mill.
Chavez called on workers, managers and private companies to resolve conflicts in the country's aluminium industry.
The Venezuelan Government estimates it will produce about 1.5m metric tonnes of liquid steel per year. The steel plant could begin operating by end-2011.