Venezuela to take over some private gold mines
The Business Times (Singapore) ^ | December 29, 2008 | none credited

Posted on Sunday, December 28, 2008 4:07:21 PM by LegendHasIt

Venezuela will seize several gold-mining concessions that previous governments granted private operators, in a bid to supplement falling oil prices with proceeds from state-controlled gold, President Hugo Chavez said on Saturday.

Mr Chavez named no specific contracts or companies to be affected, but his mining minister has vowed to next year take over the nation's largest mine, Las Cristinas, which is operated by Canadian mining company Crystallex International Corp.

'We are taking back some concessions that former governments have given, and whose permits are still held by some rich people,' in order to reduce public reliance on oil, Mr Chavez said.

Venezuela relies on oil for 94 per cent of exports and roughly half its federal budget, making it unlikely that its largely undeveloped gold reserves could ever compete in importance.

Mr Chavez acknowledges that oil prices - down 70 per cent since topping US$147 a barrel in July - will affect Venezuela, but he insists the wealthy will suffer more than the country's poor, who benefit from record social spending programmes that he vows to continue.

'Social investment will not be halted,' Mr Chavez said on Friday. 'This, for us, is sacred.'

Calls to Crystallex's Toronto headquarters went unanswered on Saturday, but a Dec 11 statement said the company had 'received no official communication concerning changes' at Las Cristinas.

Crystallex won a contract to develop the mine in 2002, but was forced to halt construction after Venezuela's environment ministry denied its final permit in May.

Mr Chavez's government nationalised four major oil projects in 2006, and has clashed over permits and labour disputes with several international gold-mining companies this year.

Mining operations have not yet begun at Las Cristinas - located in Venezuela's biologically rich Imataca Forest Reserve, which covers 3.5 million hectares.

Environmentalists warn that mining there could upset the delicate ecology. Venezuela produced roughly 4.3 tonnes of gold in 2007.

The country is also rich in diamonds, bauxite and other minerals.