Venezuelan state control harms mining

In 2013-Q1 mining continued shrinking in parallel with slower economic performance compared with 2011-2012, and a slight increase at 0.7% of the Gross Domestic Product (GDP).

Based on a report from the Central Bank of Venezuela (BCV), output in the private sector of non-metallic minerals (-3.7%) was lower than that of 2012-Q1. Moreover, a 12.1% contraction due to labor, operational and financial troubles in the public sector led to a drop in manufacturing of non-metallic minerals (-2.5%) and common metals (-31.4%).

According to Luis Rojas Machado, the chair of the Venezuelan Chamber of Mining (Camiven), such performance is the result of "the state's eagerness to control all mining." In addition, "as a result of discouragement, expropriation and a terrible management in the sector, mining is at a stalemate."

"Minerals that cannot be produced have to be imported; otherwise, manufacturing plants which rely on them, including Sidor, Venalum, and Alcasa, among others, will have to close. Manufacturing plants resort to imports to meet the need of raw materials. Therefore, we, formerly exporters of mining products, turned into importers, with the ensuing negative impact on the country balance of payments," he argued.