Tags: Chavez | Venezuela | Gold | Industry

Venezuela’s Chavez to Nationalize Gold Mines Held by ‘Mafia’

Wednesday, 17 Aug 2011 03:08 PM

Venezuelan President Hugo Chavez said he’s preparing a decree to give the government exclusive control over gold mining in the country to pare illegal operations and boost international reserves.

Chavez, speaking today on state television, said Venezuela can’t allow illegal miners to continue exploiting deposits rich in gold and coltan, an ore containing tantalum, which is used in mobile phones and video-game consoles.

“The area is run by the mafia,” he said. “We’re going to nationalize gold. We can’t keep allowing them to take it away.”

Venezuela is facing international arbitration over nationalized gold assets from three companies including Crystallex International Corp., a Canadian gold producer whose Las Cristinas mine was taken over by the government in February. Venezuela’s National Guard first seized control of the mine, which has reserves of about 27 million ounces, in November 2001 from Canada’s Vanessa Ventures.

The South American country, in an effort to boost stalled production and take advantage of rising prices, last year relaxed restrictions on gold exports to allow some companies and joint ventures with the government to send as much as 50 percent of their output abroad. Venezuela state gold producer Minerven has been shut for 15 days amid a strike, newspaper El Mundo reported today, citing company President Luis Herrera.

Gold Exports

Rusoro Mining Ltd., the only publicly traded gold miner still in Venezuela, is in talks with the government to increase gold exports, Chief Executive Officer Andre Agapov said today in a telephone interview.

“We can sell gold in the local market, but we want to sell as much gold as possible at international prices,” Agapov said. He said he didn’t have any information on a possible nationalization.

The company’s stock fell 3.3 percent to 14.5 Canadian cents on the Toronto Stock Exchange as of 2 p.m. New York time. It’s fallen 64 percent this year.

Venezuela has about $18 billion in gold reserves, and $11 billion held abroad may be transported back to Venezuela, opposition lawmaker Julio Montoya said on Aug. 16. Venezuela produces 11 metric tons of gold a year, and illegal miners extract an additional 10 to 11 tons a year, Chavez said in May.

Gold Reserves

Venezuela’s 365.8 metric tons of gold reserves makes it the 15th-largest holder of the precious metal in the world, according to an August report from the World Gold Council. Venezuela’s gold holdings accounted for about 61 percent of the nation’s international reserves, according to the report.

Gold futures for December delivery rose $9.60, or 0.4 percent, to $1,790.20 an ounce at 1:37 p.m. on the Comex in New York. Prices touched a record $1,817.60 on Aug. 11.

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