Venezuela moves to nationalise gold industryPublished by MAC on 2011-08-30
Am I worried? asks country's biggest gold miner
It isn't at all surprising.
Following recent calls to nationalise South Africa's mining industry, and demands by Zimbabwe's ruling Zanu-PF that mining companies surrender majority ownership to the state, Venezuela's president now plans a take-over of his country's gold industry.
In fact, Venezuela has only one major private operator in the gold sector - Rusoro, owned by Russian oligarch Andrei Agapov.See: http://moneytometal.org/index.php/Agapov_Group
But Agapov appears unfazed by Chavez's threatened move. He claims to have a good relationship with the president and that the new regulation will only affect "illegal" miners.
Of which (of course) he isn't one.
* For another story this week on mine nationalisation, see: Who will own South Africa's mines?
Rusoro unfazed by Chavez's nationalisation move
By Daniel Wallis
19 August 2011
CARACAS - Toronto-listed miner Rusoro appeared unfazed on Thursday by President Hugo Chavez's move to nationalize Venezuela's gold industry, saying it believed the decision only targeted illegal miners.
In a typically combative step ahead of a re-election bid next year, Chavez said on Wednesday he would put the industry under state control, partly to boost the South American country's international gold reserves.
The president also said Venezuela was shifting its reserves of bullion and cash from Western nations with mounting debt worries back home and to politically aligned states including China, Russia and Brazil.
Rusoro, the only big gold miner operating in Venezuela, said in a statement it had received no word from the government about the nationalization plans. It said it continued to produce gold from two projects and was developing two others.
The company, owned by Russia's Agapov family, said it believed the announcement targeted illegal mining operations that it said were causing significant damage to the environment through indiscriminate deforestation and the use of mercury.
"Gold produced by these illegal operations is often smuggled out of the country or sold illegally, and the government is now taking action," Rusoro's chief executive, Andre Agapov, said in the statement.
Rusoro shares fell by as much as 20 percent on Wednesday to 12 Canadian cents a share, before ending the day at 12.5 Canadian cents a share. They were up slightly at 14 Canadian cents a share on Thursday.
Chavez has put large parts of Venezuela's economy under state control. He targeted the gold industry after his government quarreled with foreign companies including Rusoro which complained that limits on how much gold they could export hurt their efforts to secure financing and develop projects.
The authoritarian but charismatic socialist leader did allude to illegal miners on Wednesday, calling on Venezuela's armed forces to help him root out smuggling "mafias."
But he also appeared to leave little doubt that he was planning a state takeover of the whole industry, including extraction and processing.
Mining and Basic Industries Minister Jose Khan provided a few more details on Thursday, saying the new legal framework would eliminate concessions and the handing over of mining areas to private foreign companies.
"We will provide an exploration license only if there is a strategic partnership in which the state has a majority stake," Khan said in a statement.
Rusoro operates the open pit Choco 10 mine and the high grade underground Isidora mine, which is a 50/50 joint venture with the government. The company produced about 100,000 ounces of gold in Venezuela last year.
The OPEC nation has been relatively small in the gold world, with formal mining producing about 6 tonnes a year. But it boasts some of Latin America's biggest gold deposits, buried below the jungles south of the Orinoco river.
The government agreed last year to let gold miners export up to 50 percent of production, up from 30 percent previously. The other 50 percent had to be sold to the central bank.
But that did not satisfy foreign companies including Rusoro, which said the limits made it much harder for them to get financing abroad, develop local projects and create jobs. (Reporting by Daniel Wallis; Editing by Phil Berlowitz)
Chavez signs decree formalizing nationalization of Venezuela's gold mining industry
The Associated Press
August 23 2011
CARACAS, Venezuela - President Hugo Chavez signed a decree on Tuesday formalizing the nationalization of Venezuela's gold mining industry, a move aimed at giving the government total control over gold produced in the South American country.
Speaking during a televised speech, Chavez also announced the repatriation of $11 billion in Venezuelan gold reserves currently held in U.S. and European banks would begin within several weeks.
Chavez did not offer details how the new decree differs from a 1965 law that nationalized gold mining. In 1977, the government granted itself exclusive rights to extract gold. But he suggested it would give authorities increased powers to evict wildcat miners from illegal mines.
The president said that officials have contacted representatives of the company Rusoro Mining Ltd., the one private company with significant mining operations in Venezuela, to continue joint gold mining operations.
Rusoro produces gold both at an open-pit mine and an underground mine that is a joint venture with the government. The company, based in Vancouver, British Columbia, has said it has had no indication from the government "of any changes to the company's operations."
In February, the government cancelled the gold mining concession of a Canadian company, Crystallex International Corp.
In addition to repatriating gold reserves, the president of Venezuela's Central Bank has said the government plans to move other international assets to buffer the country against economic woes in the United States and European countries.
Some analysts have said moving Venezuela's reserves will make investors see the country as riskier. The government is looking at the possibility of transferring its non-gold reserves to banks in China, Russia, Brazil and other nations in Asia and Latin America, according to a recent report by Finance Minister Jorge Giordani that was leaked to the local news media.
The report said that about $3.7 billion of those bank reserves are at the Switzerland-based Bank for International Settlements. It said Britain-based Barclays Bank has about $1.1 billion and smaller amounts are held at France's BNP Paribas, Deutsche Bank, J.P. Morgan Chase, the U.S. Federal Reserve and World Bank.
Venezuelan Foreign Minister Nicolas Maduro met with his Russian counterpart, Sergei Lavrov, on Tuesday to discuss the possibility of transferring Venezuela's non-gold reserves to Russian banks.
"It's an issue that our government is considering," Maduro said.