Eight mining licenses revoked in seven days

In seven days, Venezuela revoked eight mining licenses in southern Bolívar state, even though sources at the Ministry of Basic Industries and Mining claimed the move is not a government policy.

In October 30-November 6, Hugo Chávez' Government published in the Official Gazette a number of decrees banning mining activities in eight deposits in Bolivar state municipalities of Sifontes and Gran Sabana.

According to the decrees published on October 30-31 and November 1-6, the move came as a response to violations against some regulations, including tax payment, mandatory filing of both topographic blueprints for each mine and annual exploitation plans.

The Vice-Minister of Mining Iván Hernández Rojas on November 7 claimed that the decrees "are resolutions made in accordance with the laws in effect." Under said decrees, mining licenses were annulled for Inversiones Guatepereque, Minería Industrial Roraima, Venecia Explotación Minera Internacional, Minería Jaspe, Corpoaurífera, Tecno-Geo and Corporación Minera Nacional.

Licenses versus actions
Hernández warned, however, that the Government has plans to turn mining licenses into a sort of joint ventures similar to those already operating in the oil sector, with the Venezuelan state holding a majority stake.

No date has been set to complete such plans, but Hernández said the relevant steps will be made once lawmakers pass the Organic Law on Mining.

The Chair of the National Assembly Under-committee on Mining José Ramón Rivero would not indicate when the new legal framework would be set. But he hinted that the bill includes a proposal to create a National Mining Company to centralize mining in an autonomous institution. "The idea is to create a Pdvsa Mining Corporation, as those are the guidelines set by the Ministry of Basic Industries and Mining."

While in Venezuela there is a mining agency (Minerven), Hernández said the planned National Mining Company would be different to Minerven, as they are proposing a corporation that not only would keep surveillance on extraction, but also on sales and processing of each product, including the cut of diamonds.

The idea of the National Mining Corporation, however, involves a structure yet to be assembled and which is set for assessment at the National Assembly Under-committee on Mining.

New decrees revoking mining licenses in southern Venezuela
The Venezuelan Government on November 8 announced it revoked mining licenses to three companies that extracted gold and diamonds in southern Bolívar state, thus taking to 11 the number of mining licenses the Ministry of Basic Industries and Mining (Miban) has revoked over the last few days.

Since October 30, Hugo Chávez' administration has been publishing in the Official Gazette 11 decrees cancelling mining licenses that were in force for up to 14 years on 19,821 hectares located in the municipalities of Sifontes and Gran Sabana of Bolívar state.

José Mezzoni, president of the Federation of Workers of the Metallurgic, Mining and Mechanical Sectors and Related, as "an evil move the Government is making against mining businessmen and workers." However, the other side has another view of the situation.

The Ministry of Basic Industries and Mining claimed revocation of mining licenses is not a state policy intended to expel the private sector from gold and diamond deposits in Bolívar state. On November 8, the Vice-Minister of Mining, Iván Hernández Rojas, said his office is carrying out a "cleansing" process that is going to continue. In exchange, he promised new mining licenses would be issued.

"We have 24 agreements under review. We are clearing things up because some firms violated the rules, as they did not pay taxes or left the mines unexploited. But other licenses will be issued," Hernández stressed. "I have a list of 25 petitions we are considering. Over the next few days we are to grant other 18 licenses."

Against "large estates in mining"
Five months ago, former Minister of Ministry of Basic Industries and Mining Víctor Álvarez claimed that the Government's new mining policy was intended to nationalize the sector. Last May 25, at a news conference, Álvarez advocated "the creation of a temporary regime to replace the current mining licenses with joint ventures."

Such Government plans were meant to fight what they have called "large estates in mining." In this sense, Hernández claims that such plans do not involve removing the private sector from the mines.

Based on the latest figures, in Venezuela there are 760 mineral deposits under exploitation by private firms. This will not change, claims Hernández, but mining businesses will have to accommodate to new terms.

Venezuela has prevented investments in mines
Gilberto Sánchez, president of the Venezuelan Chamber of Mining Industries, acknowledged that some mining companies have run counter to the agreements they initialed with the Venezuelan Government, but warned that the current structure prevents investment in the extraction of minerals.

"There are agreements and licenses that have been abandoned and therefore the moves the Venezuelan State in such cases are provided under the current Law of Mines," he claims, adding that "on the other hands, there are many companies that have invested in good faith."

In a communiqué, Sánchez warned that "the State has not allowed a continuous flow of investments, as exploration permits are effective for one year only, and renovations are spasmodic."