Venezuela puts nation first in mining

June 21, 2008 5:56 PM ET

Minister Yubiri Ortega did not give a direct answer when asked if the government is planning to nationalize the mines. But she said Venezuela is "taking control" to "save and appropriate what is ours."

The government will consider underground mining concessions, but negotiations must take into account "what is left for the country," Ortega said. She added that Venezuela will not permit open-pit mines or mining in the biologically diverse Imataca Forest Reserve because they cause environmental degradation and contaminate the country's water supply.

The country's gold, coal and diamond mines have "benefited those who exploited them," Ortega said, while what has been left for Venezuela is "garbage."

Venezuelan President Hugo Chavez's socialist government has clashed with international gold-mining companies in recent months over permits to operate in the country's southern Bolivar state.

In May, Crystallex International Corp. of Toronto said the Environment Ministry had denied it a permit to operate its Las Cristinas gold mine. The company estimates that Las Cristinas — located in the Imataca Forest — holds about 17 million ounces (480 million grams) of gold.

Crystallex said in a statement on Tuesday that it has filed an appeal with the ministry. Vice President Richard Marshall could not be reached by telephone on Saturday, but he told The Associated Press in May that "this would be the final permit" to complete the mine's construction phase.

Plans for the company's two other Venezuelan mines, Tomi and La Victoria, could be exhausted this year, Marshall said. Last year, Crystallex — which has been operating in Venezuela for 16 years — produced more than 33,000 ounces (935,000 grams) of Venezuelan gold.

Also affected is Gold Reserve Inc. of Spokane, Washington, which announced in May that its 2007 permit to begin construction on the Las Brisas gold mining project — also in the Imataca Forest — had been rescinded. The company said in a news release that it is meeting with government officials to resolve the issue.

On Thursday, Idaho-based Hecla Mining Co. announced that it is selling its subsidiaries in Venezuela pending regulatory approval.

Venezuela's mining ministry had said it was considering rescinding Hecla's concessions over a labor dispute that interrupted operations at the company's underground Isidora gold mine outside the Imataca Forest.

Hecla said in a news release that Rusoro Mining Ltd. — based in Vancouver, British Columbia — will pay US$25 million in cash and stock for its La Camorra mining unit in Bolivar state.