MAC/20: Mines and Communities

Chavez Frias Reiterates Mine Reform Policy

Published by MAC on 2005-09-22

Chavez Frias reiterates mine reform policy; wire services still get it wrong!

Thursday, September 22, 2005

David Coleman,

President Hugo Chavez Frias reiterated his reform policy late last night (Wednesday) saying that his government is canceling all mining concessions and will not enter into any new deals with transnational companies. Wire services, however, are continuing to paint a black picture, hyperventilating on a US State Department disinformation theme that Chavez is forcing a nationalization of a sector that was already nationalized way back in 1976 --- thirty years ago!

The move is part of a restructuring of Venezuela's mining and natural resource industries aimed at cleaning up the sector after more than a half-century of corrupt practices by previous administrations he describes as having been mismanaged by an Accion Democratica (AD)/Christian Socialist (COPEI) oligarchy.

The Chavez government has already begun a review of energy and mineral concessions and contracts signed before he came to office in February 1999 an an anti-corruption ticket after a landslide vote 1998. He says some deals "are robbing the Venezuelan people of its legitimate right to the wealth of its natural resources ... what we are doing is to recover national sovereignty over our own resources!"

The main thrust, moving forward is with a national mining corporation fashioned after the proven successes of the state oil corporation, Petroleos de Venezuela (PDVSA) and under the tutelage of the heavy-industry conglomerate, the Venezuelan Guayana Corporation (CVG). Sources say that an as yet unspecified international corporation is to join forces with the CVG within the new mining corporation's infrastructure to act as a 'gatekeeper' for technical expertise and outside investment yet solidly under Venezuelan state control.

Off the record comments have been made by senior officials which point to Canadian miner Crystallex International Corporation (KRY) as being a leading contender in the infrastructure make-up of the new corporation, but no official statement has yet been made and Crystallex executives have not responded to enquiries related to the same.

China's Shandong Gold and US Hecla as well as Canadian Bolivar Gold are still in the picture with functioning mine operations in Venezuela either underway or already in production. Crystallex is already producing gold from other deposits but is awaiting final clearances on environmental permits before kick-starting work on the massive Las Cristinas gold fields for which is has an exclusive 40-year mine operating contract. Kansai Mining is said to have begun work on a diamonds deposit in southeastern Venezuela and remains unaffected by the President's reform policy statement.

Grave doubts are, however, being expressed over the uncertain future in Venezuela of Spokane (Washington)-based Gold Reserve which had been sitting on a Las Brisas concession for the greater part of the last decade with no significant production. It is known that Gold Reserve is now subject to review by the Basic Industries & Mining Ministry's special commission and it appears likely that they will be among the more than 100 concessionaires to have their concessions voided in the reform package.

President Hugo Chavez Frias is emphatic that all inactive gold and diamond mining concessions will be revoked and that his government will not issue new concessions.
Bolivar Gold's Bob Doyle has told that foreign mining interests must get used to the reality that the concept of 'concessions' is being removed from Venezuelan mining terminology. "Basically, there is no change when it applies to companies that are already operating successfully in Venezuela, like ourselves. It must be understood that the subsoil resources do belong to the Venezuelan people and that any arrangement to explore and exploit for mineral resources is conditioned on that fact."

In an earlier interview, Crystallex' vice president A. Richard Marshall had told that his organization is satisfied with progress being made by the Chavez government to clean up the country's mining sector where a huge proportion of the nation's has been mined illegally by cross-border 'garimpieros' and smuggled out by clandestine routes. It's a massive geographical area and law enforcement resources are limited, but the government is finally getting to grips with both illegalities and environmental issues.

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