Venezuelan President Hugo Chavez threatened to nationalize gold mining concessions, adding them to the oil, utility and metal assets he’s taken control of in the South American country.
The government may end the grants because of “capitalist mafias” comprising national and multinational companies that destroy the environment and exploit workers, the president said on state television yesterday.
“There is no adverse impact on production as Venezuela is only a minor producer of the metal and whatever shortfall that takes place will be made up by an increase in output from other producing countries,” said Reena Walia Nair, senior research analyst at Angel Commodities Broking Pvt. in Mumbai. “The chances are the gold concessions would be nationalized considering the country took over the foreign oil and metal assets earlier.”
Chavez has nationalized parts of the country’s oil, cement, metals and utilities industries as he extends the role of the state in the economy to create what he calls “21st century socialism.” U.S. oil companies Exxon Mobil Corp. and ConocoPhillips, whose assets were taken in 2007, are in arbitration proceedings against the South American country.
“If we are going to exploit gold, we would have to nationalize all that, recover and end the concessions,” Chavez said.
Gold Reserve Inc., a Washington-based company, in October filed for international arbitration against the government of Venezuela for the alleged expropriation of its gold mining projects. The company had spent $300 million on the projects.
Venezuela’s central bank is considering selling a bond backed by future gold production, former Mining Minister Rodolfo Sanz said March 31.
The South American country is seeking partners to develop the Las Cristinas gold deposit, one of the world’s biggest undeveloped deposit, Sanz said. Toronto-based Crystallex International Corp., which has a license to mine part of the site, may be a potential partner, he said. Chavez said last year a venture between Rusoro Mining Ltd. and the government would develop the site.
The central bank will increase its gold reserves this year and will buy more than half the estimated 20 metric tons of domestic production, former bank director Jose Khan said March 5. Khan is the new mining minister.
ValGold Resources Ltd. is also exploring for gold in the country.