Venezuela President Wants More Control of Diamond Mines
June 19, 06
Venezuelan President Hugo Chavez is proposing that the country take control of “non-productive“ gold and diamond fields. He recently asked congress to approve a draft legislation he sent, that aims to tighten the government's hold on natural resources, including areas awaiting permits.
Heavy Industries and Mining Minister Victor Alvarez, quoted by Bloomberg, said, “We want to reassert our sovereignty over these areas, which were kidnapped years ago.”
Under the proposed law, the country would take a majority stake in all mining joint ventures formed to explore non-operating fields.
According to Deputy Jose Ramon Rivero, who heads congress' mining subcommittee, Gold Reserves Inc. and Crystallex International Corp. are among the companies with gold concessions or contracts that have not begun producing.
“The reform is to rescue areas which aren't in operation, where they haven't finished exploration, where they haven't initiated mining,” Alvarez said.
Some of the areas will be taken over completely by the government and handed over to small local miners or mining cooperatives.
Concern in the market is that Chavez is taking another step closer to nationalization. Exploration companies fear their heavy investments in finding and assessing new viable mining locations will be lost, while the country reaps the benefits.
These fears are not unfounded. In late 2003, De Beers’ diamond concessions were revoked. Chavez defended the action, saying the revocation of diamond and gold concessions was “absolutely legal.”
During one of his weekly “Hello President" addresses in October 2003, Chavez said, “This is a country that is recovering its independence little by little, bit by bit (from) the oligarchy and their transnational allies,” adding that he authorized the move.
Recently he forced oil companies to pay higher taxes after they were forced to form partnerships with the government.
The proposed bill, expected to clear congress by August 15, is the first part of a comprehensive overhaul of the country's mining legislation, said Alvarez.