MAC: Mines and Communities

The multiple risks of mining in Bolivar State, Venezuela

Published by MAC on 2016-04-05
Source: Reuters, Venezuelanalysis

Rally Against Maduro government’s decision to open up the Orinoco to transnational mining

Several dozen activists from Venezuelan social movements demonstrated outside the offices of state oil company PDVSA in protest of the Maduro government’s decision to open up 117,000 km of the Orinoco to transnational mining firms.

The demonstration is part of a week of action against a series of agreements signed by the Venezuelan government with Canadian mining firm Gold Reserve and several Chinese companies in February. The deals authorize open-pit mining in the country’s far eastern Amazonian state of Bolivar, amounting to 12 percent of national territory.

In a mine near the town of Tumeremo, Bolivar state, Venezuelan authorities found 18 bodies whom they identified as part of a group of 28 miners declared missing since March 4. The finding substantiates allegations of a massacre perpetrated by criminal groups who run illegal gold mining operations in the area.

A World Bank arbitration tribunal has ordered Venezuela to pay damages of nearly $1.4 billion as compensation for expropriating the Las Cristinas mining project, Crystallex said.

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Crystallex says World Bank body orders Venezuela to pay it $1.4 billion

5 April 2016

A World Bank tribunal has ordered Venezuela to pay damages of nearly $1.4 billion to Crystallex International Corp, a Canadian mining company, as compensation for expropriating the miner's Las Cristinas mining project, Crystallex said on Tuesday.

The award, worth $1.386 billion, was released on Monday by the World Bank's International Centre for Settlement of Investment Disputes, the company said in a statement.

Venezuela's oil and mining ministry did not immediately respond to a request for comment. The award was not yet available on the body's website.

Crystallex filed its arbitration request on Feb. 16, 2011 after former president Hugo Chavez's government took over the gold project in 2008 as part of a plan to put key industries into state hands.

Las Cristinas was Crystallex's flagship project and at the time was regarded as one of the world's biggest undeveloped gold deposits with estimated gold reserves of 12.5 million ounces. But development was delayed for years by legal disputes and permitting hold-ups.

The award to Crystallex follows that made by the same tribunal in 2014 to another small Canadian miner, Gold Reserve, who was awarded around $750 million for the 2009 termination of its Las Brisas concession in Venezuela.

Gold Reserve and Venezuela, which is strapped for funds at a time of low oil prices, triple-digit inflation and heavy debt payments due this year, had been in a dispute over the payment until February this year when they reached a deal to jointly exploit the Brisas and Las Cristinas projects.

Crystallex "looks forward to collecting on the award on behalf of all of its stakeholders", Chief Executive Robert Fung said in a statement. He was not immediately available for further comment.

Crystallex's legal team was led by international law firm Freshfields Bruckhaus Deringer, it said. The firm was not immediately available for comment.

Last November Crystallex filed a complaint in a U.S. court, seeking to recover $2.8 billion it says it is owed from Venezuela's state-run oil company PDVSA and its U.S. subsidiary.

(Reporting by Nicole Mordant in Vancouver and Alexandra Ulmer in Caracas; Editing by Bernard Orr and Marguerita Choy)

Venezuelan Social Movements Rally Against Open-Pit Mining in the Orinoco Arc

Lucas Koerner -

3 April 2016

Caracas – Several dozen activists from Venezuelan social movements demonstrated outside the offices of state oil company PDVSA on Thursday in protest of the Maduro government’s decision to open up the 117,000 km “Orinoco Arc” to transnational mining firms.

“We are here to express our categorical rejection of the decision of the national executive to sign deals with transnationals behind the backs of the Venezuelan people, without any public consultation,” said Mara Garcia, a member of the Trotskyist group Marea Socialista.

The demonstration is part of a week of action organized by popular movements against a series of agreements signed by the Venezuelan government with Canadian mining firm Gold Reserve and several Chinese companies in February. The deals authorize open-pit mining in the country’s far eastern Amazonian state of Bolivar, amounting to 12 percent of national territory.

While the government of President Nicolas Maduro has defended the project as a necessary step in diversifying the country’s oil-driven economy and shoring up fiscal stability amid an acute recession, grassroots activists have condemned the initiative as an “ecocide” with severe social and ecological repercussions.

“We are certain that the Orinoco Arc is an open-pit homicide against the environment,” affirmed Valentin Guimares, 26, who noted that open-pit mining uses between 450 and 1060 liters of water per gram of gold extracted, further endangering water security in a country suffering its worst drought in 47 years.

“This project contradicts the eco-socialist principles of the revolution as well as the entire legal framework we have fought and shed so much blood for,” explained Yarumi Gonzalez, 30, referring to the 2013-2019 Homeland Plan’s fifth strategic objective of “preserving the life of the planet” as well as the environmental protections enshrined under articles 127, 128, and 129 of the Constitution.

In addition to ecological devastation, opponents of the initiative fear that transnational mining will spur increased paramilitary activity with dire consequences for the large indigenous communities of the region.

For Gonzalez, the decision on the part of the Chavista government is particularly shameful given that President Hugo Chávez revoked Gold Reserve’s Las Brisas concession in 2008 as part of his government’s bid to nationalize the mining sector.

“Like Chávez, we make a call to strike at the helm, to resume the revolutionary process, understanding that Chávez himself put a stop to Gold Reserve,” she told Venezuelanalysis.

After more than four hours standing under the hot sun, the activists were finally able to meet with representatives of PDVSA and deliver a letter signed by over 50 grassroots organizations to the vice-minister of oil and mining.

Among the movements’ demands were calls for the government to undertake an environmental impact study of the project, conduct a binding national consultation, and revoke the mining concessions in the case that the population opposes the project.

While the government has yet to respond to the petition, numerous rank-and-file PDVSA employees exiting the building during the protest expressed support for the activists’ aims, with one worker commenting, “This is how you get things done.”

The action is the beginning of a protracted bottom-up campaign against the Orinoco Arc initiative modeled on last year’s successful campaign against a government decree authorizing coal mining in the Perija mountains.

Last Wednesday, the groups organized a forum in Caracas featuring former Chávez environment minister Ana Elisa Osorio as well as Indigenous University of Venezuela Rector Esteban Mosonyi, who voiced strong critiques of the Maduro government’s decision.

Questions for the President on Open-Pit Mining

Lenin Cardozo – Aporrea -

18 March 2016

Mr. President, we understand that the urgencies of government don’t allow you to inquire too much into complex issues, and due to that, you probably receive and take on board every alleged “good idea” that your advisors or collaborators hand over to you. But you must also know that that lack of knowledge doesn’t absolve you from responsibility once you have taken the decision to carry out or decree an action.

Here we are referring specifically to the concessions granted to transnationals to develop open-pit mining across 12% of Venezuelan territory, bringing as a consequence irreversible damage to 30% of our forests, chemical pollution in the Orinoco river and in other water sources that happen to be inside the exploitation area. This is the reason why we are intrigued to know: what makes you think that the authorisation to carry out open-pit mining, the most damaging thing that mankind has done to the earth since nuclear testing, and which doesn’t look set to last much longer in the rest of the world, would be good for the present, and above all the future, of Venezuela?

Why take the easy route of handing over the exploitation of our natural resources to international franchises, for them to tell us how much they extracted and how much money we’re expected to pay for this amputation of our homeland?

Does the creativity born from the economic crisis only extend to our proposing that we substitute the oil rentier model, which has maintained us in a narcotic state throughout the past 100 years and which has prevented us from advancing towards economic independence, for a rentier model of greed (extractive mining) that leaves the destruction of eco-systems and the loss of sovereignty in its wake?

Is it not possible to work with that same wildlife that we are condemning to death in order to develop natural and outdoor tourism which generates USD$263 billion annually? Or through bird-watching? Which generates USD$80 billion? Countries with less scenic resources than ourselves, such as Spain and France, are today raking in USD$50 billion. Does Colombia have more natural wealth than Venezuela? It is projected to generate 300,000 new jobs and earn USD$6 billion annually from 2018? Eco-tourism is the second-greatest generator of foreign currency earnings in our brother country Ecuador. We don’t even generate 0.1% of national income in that area. In Costa Rica, it is the principal motor of the economy.

Were the specialists in the Environment Ministry or the eco-socialists of the 21st century in government consulted as real state advisors in this rushed mining “rescue” plan?

We don’t understand, if President Chavez himself revoked the concession to Gold Reserve for the imminent damage that it represented– the very same business which is generating an enormous and fatal ecocide in the Venezuela Essequibo– how we are going to once again grant it this concession, but now with even more territory and tax and royalty concessions?

Are Chavez’s ideas just good for some things and not for others for the government? Where are the diligent actions of the Venezuelan Foreign Office in the face of the ecological affront that this Canadian business is carrying out in the Essequibo through open-pit mining? Or the concessions to the Chinese that are destroying our woods? Or the Russian franchises that are taking ownership over other minerals? Or are we only interested in the Essequibo for the areas where there is oil?

How can this be understood when the homeland (plan for the nation) has a fifth historical objective, where its first strategic and general goal sets out orientating a new model of national development based on biodiversity and the comparative advantages of being the tenth country in the world and the sixth in Latin America for biological diversity: a synthesis of all the the ecosystems present in the Latin American region? When its final strategic objective is for developing and implementing a policy to organise the territory, attending to ecological, geographic, human, social, cultural, economic and political realities in accordance with sustainable development? Now we are going to throw a bucket full of misery over that green declaration and all for the fact that we will get some supposed foreign currency earnings from the ecocide that the anti-planetary franchises will doubtlessly carry out? Was that historic objective eliminated and we just didn’t realise?

Bodies of 18 Missing Miners Found in Mass Grave in Venezuela

Lucas Koerner -

15 March 2016

Caracas – Venezuelan authorities found 18 bodies in a mine near the town of Tumeremo in Bolivar state on Monday, whom they identified as part of the 28 miners declared missing since March 4.

“We have concluded the search for the disappeared in Tumeremo with the finding of 18 bodies,” announced Venezuelan Attorney General Luisa Ortega Diaz via Twitter.

According to the top prosecutor, the bodies were located hanks to “14 witnesses” who led authorities to the site in the “Nuevo Callao” mine near the southeastern Venezuelan town.

The cadavers were uncovered in a “mass grave, wrapped in trash bags”, reported Tarek William Saab, the country’s chief ombudsman, who has been on the ground investigating the case.

While 18 of the bodies have currently been identified, authorities have found a total of 21 cadavers, a number which “could increase”.

The finding substantiates allegations of a massacre perpetrated by criminal groups who run illegal gold mining operations in the area.

On Saturday, the public prosecutor’s office issued a warrant for the arrest of a 44 year-old Ecuadorian national by the name of Andres Ulloa Suarez who they accuse of planning the massacre. Two other arrest warrants have also been issued.

Meanwhile, authorities are actively continuing the search for a Colombia-trained Ecuadorian paramilitary named Hendry Norberto Bonalde, alias “El Topo”, who is widely believed to lead criminal activities in the area.

Bolivar state Governor Francisco Rangel Gomez, for his part, pledged his government’s ongoing collaboration with the police investigation and promised that the case “will not go unpunished”.

The governor came under fire last week after initially dismissing the murder allegations as “false information” divulged by right-wing politicians “trying to sow chaos in Bolivar state”.

Speaking on national television, Venezuelan President Nicolas Maduro likewise vowed that those responsible will be brought to justice, including any state officials linked to the crime.

“If any state security body or any state official is involved, they are going to jail,” he warned.

In particular, Maduro accused local politicians of having links to the criminal groups responsible for the massacre.

“There are legislators and politicians from this region who are linked to the paramilitary gold [mining] mafias,” he stated.

Investigations in Tumeremo will continue as forensic experts work to identify the remaining bodies in a process that will be overseen by the nation’s top ombudsman.

Venezuela, Gold Reserve to settle arbitration dispute with joint venture

Alexandra Ulmer and Girish Gupta


24 February 2016

Venezuela and Canadian mining company Gold Reserve signed a memorandum of understanding on Wednesday to settle a protracted arbitration dispute over a gold concession through creation of a joint venture in the South American country.

The deal would see Venezuela and Gold Reserve, which were embroiled in a dispute over the termination of the company's Las Brisas gold concession in 2009, jointly exploit the Brisas and Las Cristinas mines, President Nicolas Maduro said.

The deal's fine print was not immediately clear, although Venezuela said the deal would result in a $2 billion dollar loan for the crisis-hit country.

Gold Reserve's president, Doug Belanger, told Reuters that Venezuela would likely use the mining property as collateral to obtain financing.

The small Canadian miner will receive compensation as part of the deal, Belanger added, although declining to give estimates for compensation or investment.

"We're in agreement to settle. We will be receiving a payment," Belanger said after the signing ceremony in Caracas on Wednesday night, adding a final settlement was expected soon.

Arbitration Disputes

Gold Reserve was awarded around $750 million by the International Center for Settlement of Investment Disputes for the 2009 termination of its Las Brisas concession.

The company and Venezuela had been in a dispute over the payment, which accrues interest.

Other international companies, including oil majors Exxon Mobil Corp and ConocoPhillips, are seeking compensation for nationalizations under the late president, Hugo Chavez.

Venezuela's government celebrated the deal on Wednesday, saying it would boost investment in the country and proved its willingness to negotiate.

"It's the resolution of a conflict," Maduro said during a speech in which he announced other mining deals to certify Venezuela's gold reserves, which he said could be the world's second biggest. "Now we are partners."

Oil Minister Eulogio Del Pino added Gold Reserve would have a 45 percent stake in the joint venture, with the remaining 55 percent going to the state.

"(This agreement) demonstrates this country's responsibility toward international investors," said Del Pino, amid worries on Wall Street that Venezuela may default on its debt or seek to avoid hefty arbitration payments.

Sources told Reuters earlier on Wednesday that the country had the funds to pay $1.5 billion due on Friday on its Global 2016 bond.

(Reporting by Alexandra Ulmer; Writing by Girish Gupta; Editing by Peter Cooney)

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