Venezuela poised to take control of idle mines

Listen to this article

00:00
00:00

The Venezuelan parliament will within weeks approve a new mining law under which gold and diamond fields deemed “inactive” will be transformed into joint ventures with majority state-ownership or granted to mining co-operatives, government officials said on Friday.

The move, which is similar to those already taken in the oil industry, had been widely anticipated, causing concern to foreign investors, including Toronto-based Crystallex International, which owns, among others, Las Cristinas goldmining tract in the south-eastern state of Bolívar.

“Areas that are inactive are to be recuperated and rescued by the Venezuelan state,” said Víctor Alvarez, the minister of basic industry and mining. Mr Alvarez was speaking at a ceremony in the National Assembly at which he handed over draft legislation prepared by the office of President Hugo Chávez.

Legislative chairman Nicolás Maduro said the mining bill would be processed speedily, and that he expected it to be passed before the summer recess. “This bill is a number-one priority, on account of its social, economic and political importance,” Mr Maduro added.

All 167 members of parliament belong to the government side, since the opposition boycotted last December’s legislative elections, and there is therefore likely to be little resistance to the initiative

Mr Chávez announced last year that he had decided to “cancel all mining concessions”. That statement, and subsequent clarifications regarding the joint-venture proposal, caused shares in Crystallex to slump in value, despite the company’s attempts to reassure investors that its concessions were safe.

The Las Cristinas mine is expected to start commercial production in two years, at a rate of around 300,000 ounces per year. Crystallex says it has been waiting since late 2004 for approval of its environmental plan.

The company expressed confidence on Friday that it would be excluded from the proposed law. Richard Marshall, vice-president of Crystallex, said the ministry of basic industries and mining had completed a comprehensive review of the Las Cristinas project in March.

“All we’re waiting on is the environmental permit from the minister of environment”, Mr Marshall said. “We’ve already engaged these projects and that’s why they gave us the green light in March.”

Asked specifically about Crystallex on Friday, Mr Alvarez declined to comment on specific cases. However, he said that the permit process was, “often merely an excuse and a pretext to justify inactivity”.

The minister was accompanied at the ceremony by a group of mine workers, who were invited by Maduro to join the commissions that will study the bill. The congressman said that, once approved, the law should be implemented with the help of a “popular movement”.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.