The law, decreed by Chavez last month and published in the Official Gazette on Monday, will allow private firms to mine gold, but only in partnerships with the government in which the state will receive royalties of up to 13 percent.

"All of the gold that is obtained as a consequence of mining activity in the national territory must be sold and delivered to the Republic of Venezuela," the official text of the new law says.

"The republic will exercise a monopoly on the marketing of gold," it adds.

The leftist Chavez decreed the law through special powers granted in December 2010 that allow him to bypass parliament.

Under the new law, the state can enter into partnerships with private firms in which it holds a majority of at least 55 percent.

Russia's Rusoro is currently operating a gold mine in the south of the country, and Cuba's Geominsal has evaluated reserves in partnership with Venezuela's state-run Minerven.

The new law grants the state gold royalties of 13 percent, but reduces the rate to as low as three percent for mines "linked to social interest, with the participation of indigenous communities, small-scale or artisanal miners."

In August, Chavez announced his intention to nationalize the gold sector in order to prevent "mafias" from exploiting Venezuela's natural resources. Illegal mining makes up 60 percent of local production in the gold sector.

The leading oil exporter in South America, Venezuela has the 15th largest gold reserves in the world, with an estimated 365.8 tons, according to the World Gold Council.

Copyright AFP (Agence France-Presse), 2011