About 60% of Venezuela's gold production derived from informal labor

Published Wednesday, March 03, 2010
VHeadline Venezuela News reports: Venezuelan media sources are quoting official from the Central Bank of Venezuela (BCV) as saying that about 60% of in-country gold production is in the hands of illegal wildcat 'garimpieros' or artesanal miners and that this factor significantly reduces government tax revenues that would otherwise accrue to the State from organized gold mining.

BCV information chief Barbara Rodriguez admitted that over 60% of "informally produced gold" is otherwise diverted from tax regulations and that it becomes "a distorting element" in the government's overview and evaluations of Venezuela's gold mining potential.

BCV director Jose Khan has said that the government plans to offer corrective incentives and to improve working conditions for illegal miners or 'garimpieros' who take gold out of Venezuela for sale on international markets -- without certification and generally at prices in excess what the Central Bank can legally pay, considering exchange control limitations which have been in force since 2003 ... besides which, illegal/informal miners seldom, if ever, declare or pay 3% production taxes to the Venezuelan Treasury as would otherwise be the norm.

Rodriguez told reporters that the BCV is unable to pay for gold at any other price than the official dollar -- which, as far as gold and other metals is concerned, is set at Bs.f 4.30 to the US$. The official exchange rate had remained at Bs.f 2.15 / US$ since 2005 and -- significantly, perhaps -- BCV gold purchases had recently been floored. Official figures show just 2.07 tonnes in national production in 2009, 2.81 tonnes in 2008 and 4.64 tonnes in 2007.

Venezuela's gold reserves are said to rank #15 worldwide with an officially estimated 363.70 tonnes of ore ... a law introduced by decree in 2009 holds that major gold producers must sell 60% of their production to the BCV while the small-scale miners are only required to sell 15% ... and many do not submit to regulations. Faced with this challenge, Venezuela's Basic Industries & Mining (MIBAM) Ministry has, since 2007, been seeking to regain central government control of economically strategic industries and has brought some 500,000 hectares of gold fields under state control through expropriation (eminent domain) enforcement.