Government to mediate conflict between Hecla, employees - Venezuela

Wednesday, June 4, 2008

Venezuela's minister of basic industries and mining, Rodolfo Sanz, will meet this week with representatives from US company Hecla Mining (NYSE: HL), the ministry (Mibam) said in a statement.

The goal is "to sign a statement that will allow activity to resume under better conditions and continue the proceedings that are underway to terminate the concession," Sanz said.

Employees paralyzed Mina Isidora in late April and later the plant that Hecla operates there after accusations of poor treatment.

"Employees have shown photos of how [the company] made them remove their clothing at the end of each shift," supposedly to prevent workers from taking gold, a spokesperson from Venezuelan state company Minerven told BNamericas. "It prompted [employees] to protest and paralyze works."

Minerven controls the concession that Hecla operates.

"There is really no substance to the claims," Hecla president and CEO Phillips S. Baker said in an interview. "You can't be operating in a place for nine years and mistreat workers."

The CEO added that the company received notice from Mibam in May that its operations at Block B, where Mina Isidora sits, would be suspended until underground workings are up to the ministry's standards.

If operations start anew, Mibam will continue mediating a revision of the mining contract between Minerven and Hecla. The process will take a minimum of six months and Sanz has suggested that employees resume activities in the meantime, the statement said.

However, according to Baker the concession termination process the ministry refers to in its statement relates specifically to the La Camorra mine. Hecla has completed mining at La Camorra, though some areas are being let out to small-scale miners, meaning there is no reason to terminate the company's concession, he added.

State-owned Minerven controls the La Camorra mine and Block B, made up of the La Laguna, Santa Rita, Panamá and Isidora mines, all located in the El Callao area of Venezuela's Guayana region. Minerven awarded the concession to Coeur d'Alene-based Hecla in a purchase-lease agreement.

Hecla's Venezuelan operations produced 17,089oz of gold in the first quarter, accounting for 3% of the company's gross profits.

Harvey Beltrán
Business News Americas