One-stop mining shop aims to cut through red tape
THE LEGISLATIVE FRAMEWORK HAS BEEN REWORKED TO ENCOURAGE DIVERSIFICATION INTO EXPLOITATION OF MINERALS AND PRECIOUS METALS

Venezuela is well-endowed with mineral resources, but many have lain unexploited because of the concentrated focus on hydrocarbons. Indeed, for about 30 years, the mining sector has been stagnant, and its production accounts for only one percent of GDP.

CRYSTALLEX has been active in gold mining in the country since the early 1990s

However, that situation is now changing, as the government begins to encourage diversification of the economy. Hence the introduction of a new Mining Law in 1999, aimed at attracting both local and overseas investors.
One of the key elements of the new legislation was the creation of a one-stop shop that provides a contact or sponsor within the Ministry of Energy and Mines, to assist cutting through the red tape that has sometimes hindered mining initiatives in the past.

State-owned Corporación Venezolana de Guayana (CVG) is responsible for handling the country’s main mining concessions, with great success, according to the Minister for Energy and Mines, Rafael Ramírez. “But some resources are being developed without control in some cases,” he admits. “In the south of the country, there is some small-scale mining that is harmful to the environment. Some people use mercury, and there are miners who are being exploited.”

The Ministry is attempting to regulate the situation, partly by encouraging the settlement of disputed titles – all of which in principle stem from the state – but also by integrating the informal mining sector into the mainstream. “We’re talking about bringing these people who are being exploited, or who are working in an anarchic way, into a mining cooperative,” Mr. Ramírez says. “We are also opening up the sector to domestic and international capital.”
A number of the bigger local mining companies have organized themselves into a professional mining chamber, Cámara Minera de Venezuela (CAMIVEN), partly to press for further reforms, as they are not convinced that the 1999 Mining Law is perfect. “Some of it is already obsolete,” says CAMIVEN’s President, Gilberto Sanchez. “And it has not been possible to apply it universally.”

Mr. Sanchez believes that the mining sector could contribute considerably more to Venezuela’s economy than it does at present.
“Before oil was discovered, mining represented a much higher percentage of GDP,” he says. “The mining sector could participate tremendously in diversifying the economy, while at the same time act as a social agent by creating more jobs.”
Environmental awareness is being taken increasingly seriously in Venezuela, as it is elsewhere in the world, whether relating to the extraction of coal, bauxite – from which aluminum is derived – or any of the other minerals already being exploited. This trend is going to have repercussions for investment in the sector, as Mr. Sanchez realizes.

LUIS FELIPE COTTIN President of Crystallex de Venezuela

“I think, in relation to the big projects being considered today, we are talking about more than 15 percent of investment costs for environmental protection – more in some cases,” he says.
One of the developments being watched with considerable interest is gold mining in Bolivar State. The gold deposits at Las Cristinas are believed to be among the largest undeveloped sources in the world. Exact ownership of some titles has been a matter of legal dispute for several years, but a big player in the area at the moment is a Canadian gold mining company, Crystallex, which has high hopes for the region.
The company has been active in Venezuela since the early 1990s and also has operations in Uruguay.
As the President of Crystallex de Venezuela, Luis Felipe Cottin, says: “We know the country, the area and the business. We’re expanding the gold business, and we know that this is a long-term operation.”
He acknowledges that there are some drawbacks to working in Venezuela, but says that the benefits outweigh any inconvenience. “In Venezuela we have potential not only in gold, but in many other metals as well.”