Toronto Media Co-op

Local Independent News

More independent news:
Do you want free independent news delivered weekly? sign up now
Can you support independent journalists with $5? donate today!

Venezuela vs. Canadian Gold

Chavez Squares Off Against Canadian Mining Companies; Banks

by Gwalgen Geordie Dent

Toronto - The nationalization march continues on in Venezuela.  

On Tuesday, the Venezuelan government issued a decree nationalizing their gold mines.  This comes off the backs of series of nationalizations undertaken by the government in the last 4 years which have included targeted oil, steel, supermarket and glass manufacturing businesses and the entire cement industry.

Rather than entire sectors, the government has typically used nationalization to target companies it alleges are engaged in price fixing or illegal activities. It has also nationalized on the besis o strategic domestic importance.

Tuesday's announcement by the government stated that the nationalizations were in relation to illegal mining in the Southern Bolivar province.  The government states that illegal mining is taking away 60% of Venezuelas gold production.

However the announcement could also be due to a number of companies having recently fought  heavily with the Chavez government: Canadian companies.

There are dozens of junior Canadian mining and exploration companies in Venezuela, however two of the biggest foreign-owned gold companies are Canadian.

Most famous of these is Toronto-based Crystallex, who (previously) owned the the massive Las Cristinas mine, one of the largest gold deposits in South America.  After being denied an environmental permit for the mine in 2008, the company had sued Venezuela for depriving it of its gold interests in international-arbitration.  The company was to develop a large low-cost project in the Las Cristinas area next to a similarly sized project by US-based Gold Reserve Inc.  Both are now instead suing the government for billions of dollars.

While Crystallex and Gold Reserve have massive claims, they have not been able to actually mine their deposits. 

Most gold mining in Venezuela is carried out by state-run companies.  The only active foreign company mining in the region is Canadian-Russian Rusaro Mining Corp.   Because it operates joint rojects with the government it may not have been nationalized under Tuesday's decree.  It has stated that it believes that Venezuela is only going after illegal mining in the Bolivar state. However it too has been fighting the government.   

Rusaro, owned by a powerful Russian family and Canadian Frank Giustra, is headquartered in Vancouver and has two joint mines it operates with the government.  It is now allowed to export out of the country 50% of what it produces (up from 30%) but has been fighting the government to be able to export more.

Venezuela has recently taken a number of actions to shore up their gold reserves both domestically and internationally.  Venezuela has the world's 15th largest gold reserves.

The country recently took the unprecedented step of starting to repatriate almost two-thrids of their international gold reserves mostly from private companies in Britain, the US and Canada's Bank of Nova Scotia.

In addition, over 20% of Venezuela's cash reserves have been diversified from US and other Western currencies into currencies from the BRIC countries (Brazil, Russia, India and China).

Gold has globally shot up in price recently as concerns continue over a massive crash in the value of major currencies.  It is likely that Venezuela is concerned that their reserves could be seized in an economic crisis or if sanctions are levied against them.

China announced similar gold-repatriation measures in 2009.

Want more grassroots coverage?
Join the Media Co-op today.

Creative Commons license icon Creative Commons license icon

About the poster

Trusted by 3 other users.
Has posted 178 times.
View Gwalgen Dent's profile »

Recent Posts:

Gwalgen Dent (Gwalgen Geordie Dent)
Member since August 2008


525 words

The site for the Toronto local of The Media Co-op has been archived and will no longer be updated. Please visit the main Media Co-op website to learn more about the organization.