Venezuela may restrict foreign mining
CARACAS, Venezuela — Venezuelan President Hugo Chavez said his government will cancel all mining licenses and stop issuing new ones to foreign companies – a message local mining firms were scrambling to decipher this week.
Hecla Mining Co. of Coeur d’Alene operates a gold mine in eastern Venezuela, and is building a second gold mine in the same region. Gold Reserve Inc. of Spokane has applied for permits to construct a $552 million, open-pit mine in Venezuela’s Bolivar state. The Brisas Mine would employ 900 people. It’s tentatively scheduled to open in 2007.
Chavez’s remark in a speech late Wednesday expanded on his past statements that the government would eliminate licenses, or concessions, on stalled mining projects or those that violate the law. The speech followed similar remarks made over the past week by Chavez and his minister of mining.
“I want to tell the country I’ve decided, after looking at this and that, to cancel all mining concessions. We’re not giving more concessions to transnationals,” Chavez said.
Foreign companies, he said, tend to gain access to mines and leave them idle, while Venezuelans in nearby areas need jobs.
Gold Reserve’s stock plunged 24 percent Thursday, closing at $2.10 per share. Volatility earlier in the week led to a temporary halt in trading. Gold Reserve President Doug Belanger was traveling and could not immediately be reached for comment Thursday. He issued a statement an earlier statement, saying that Gold Reserve enjoys an “excellent working relationship” with the Venezuelan government, and that the Brisas project was on track.
Hecla’s stock hiccupped on early Wednesday, dropping 8 percent, but has since recovered. Company officials had Chavez’s speech translated, and are trying to sort out the nuances, said Vicki Veltkamp, Hecla spokeswoman.
“What we hear is a consistent theme,” she said. In remarks over the past week, the government appears to be targeting inactive mining concessions and illegal activity, Veltkamp said. “We are doing the things he (Chavez) wants. We are employing hundreds of Venezuelans, which is his point.”
Hecla has also worked to provide clean water and electricity to its workers, set up literacy and business training programs, and donated to Venezuelan schools and hospitals, Veltkamp said.
The company hasn’t received any official notification that its operations in Venezuela will change. However, “I think all the details on this will take a while to sort out,” Veltkamp said.
During his speech, Chavez specifically mentioned the stalled Las Cristinas gold mine, which Toronto-based Crystallex International Corp. has an operating contract to develop. The project has been mired in legal challenges and ownership disputes.
“(Las Cristinas) is the eighth gold mine in the world, right here. And, well, that’s a mess if a company from who-knows-where has the concession, then sold it to another. They sell it,” Chavez said.
Chavez said the aim “is to recover the national power, sovereignty to manage our own resources.”
Chavez did not directly mention Crystallex in his comments. The company’s president had issued a statement hours earlier saying plans were on track for the firm to develop the gold mine in eastern Venezuela.
Chavez said earlier this week the government is seeking to create a national mining company at Las Cristinas, and Crystallex president and CEO Todd Bruce said that does not change the status of the project.
Chavez, an ally of Cuban President Fidel Castro, says he is leading Venezuela away from capitalism toward a new socialist system.
His government also has sought to create joint ventures with foreign oil companies to obtain a majority stake in managing oil fields where private oil companies used to pump oil independently under contract.
Staff writer Becky Kramer contributed to this report.