President Hugo Chavez signed a decree on Tuesday formalising the nationalisation of Venezuela's gold mining industry, a move aimed at giving the government total control over gold produced in the South American country. Speaking during a televised speech, Chavez also announced the repatriation of $11 billion in Venezuelan gold reserves currently held in US and European banks would begin within several weeks.
Chavez did not offer details how the new decree differs from a 1965 law that nationalised gold mining. In 1977, the government granted itself exclusive rights to extract gold. But he suggested it would give authorities increased powers to evict wildcat miners from illegal mines.
The president said that officials have contacted representatives of the company Rusoro Mining Ltd, the one private company with significant mining operations in Venezuela, to continue joint gold mining operations. Rusoro produces gold both at an open-pit mine and an underground mine that is a joint venture with the government. The company, based in Vancouver, British Columbia, has said it has had no indication from the government "of any changes to the company's operations."
In February, the government cancelled the gold mining concession of a Canadian company, Crystallex International Corp. In addition to repatriating gold reserves, the president of Venezuela's Central Bank has said the government plans to move other international assets to buffer the country against economic woes in the United States and European countries.
Some analysts have said moving Venezuela's reserves will make investors see the country as riskier. The government is looking at the possibility of transferring its non-gold reserves to banks in China, Russia, Brazil and other nations in Asia and Latin America, according to a recent report by Finance Minister Jorge Giordani that was leaked to the local news media.
The report said that about $3.7 billion of those bank reserves are at the Switzerland-based Bank for International Settlements. It said Britain-based Barclays Bank has about $1.1 billion and smaller amounts are held at France's BNP Paribas, Deutsche Bank, J.P. Morgan Chase, the US Federal Reserve and World Bank. Venezuelan Foreign Minister Nicolas Maduro met with his Russian counterpart, Sergei Lavrov, on Tuesday to discuss the possibility of transferring Venezuela's non-gold reserves to Russian banks. "It's an issue that our government is considering," Maduro said.
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