Venezuelan President Hugo Chavez today announced plans to nationalize the country’s gold mining sector, Bloomberg reports. Chavez stated the decision was necessary to control illegal mining. Details of how and when the plan will proceed are still to come.
The country currently faces international arbitration from three gold miners. Last February the state-owned Corporacion Venezolana de Guayana terminated its operating contract with Crystallex, ending the Canadian company’s nine-year struggle to develop Las Cristinas gold project. Another Canadian, Gold Reserve, has launched a $2.1-billion claim after similar action was taken against its Brisas Project. Gold Reserve had invested $300 million in the gold-copper deposit.
Rusoro Mining, with offices in Vancouver, Caracas and Moscow, has criticized Venezuela’s gold export limits.
Last April Chavez referred to miners as “crazy people” and stated, “We cannot allow national and transnational mafias to continue destroying our homeland.” The following month Venezuela’s state-run gold mining company called for a $70-million government bailout.
In 2008, political interference and nationalization in different countries prompted Canaccord Adams analyst Wendell Zerb to say three factors determine a mining company’s success: “Location, location, location.”
by Greg Klein