Venezuela will seize gold mining concessions, Chavez says

Section:

By Rachel Jones
Associated Press
via Yahoo News
Saturday December 27, 2008

http://finance.yahoo.com/news/Venezuela-to-seize-gold-apf-13922353.html

CARACAS, Venezuela -- Venezuela will seize several gold mining concessions that previous governments granted private operators, in a bid to supplement falling oil prices with proceeds from state-controlled gold, President Hugo Chavez said Saturday.

Chavez named no specific contracts or companies to be affected, but his mining minister has vowed to take over next year the nation's largest mine, Las Cristinas, which is operated by Canadian mining company Crystallex International Corp.

"We are taking back some concessions that former governments have given, and whose permits are still held by some rich people," in order to reduce public reliance on oil, Chavez said.

Venezuela relies on oil for 94 percent of exports and roughly half its federal budget, making it unlikely that the country's largely undeveloped gold reserves could compete.

But Chavez said Venezuela must "increase the country's income through non-oil exports," including its world-famous cacao and products from recently nationalized steel and cement companies.

Chavez acknowledges that oil prices -- down 70 percent since topping $147 a barrel in July -- will affect Venezuela, but he insists the wealthy will suffer more than the country's poor, who benefit from social spending programs that he vows to continue.

"Social investment will not be halted," Chavez said Friday. "This, for us, is sacred."

Calls to Crystallex's Toronto headquarters went unanswered Saturday, but a Dec. 11 statement said the company had "received no official communication concerning changes" at Las Cristinas.

Crystallex won a contract to develop the mine in 2002, but was forced to halt construction after Venezuela's environment ministry denied its final permit last May.

Chavez's government nationalized four major oil projects in 2006, and has clashed over permits and labor disputes with several international gold mining companies this year.

Mining operations have not yet begun at Las Cristinas -- located in Venezuela's biologically rich Imataca Forest Reserve, which covers 8.6 million acres (3.5 million hectares). Environmentalists warn that mining there could upset the delicate ecology.

Venezuela produced roughly 4.2 tons (4.3 metric tons) of gold in 2007, and Chavez said he hopes to double that figure next year. The country is also rich in diamonds, bauxite, and other minerals.

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