Engineering & Mining Journal

JUL 2013

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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R E S O U R C E N AT I O N A L I S M Ramirez, his Minister of Energy and Petroleum, told El Universal that "multinational companies operate in different ways to perform covert and illegal activities." Rusoro's royalty rates were fixed at 13% soon thereafter, coupled with new rules mandating state ownership of 55% of all joint ventures—up from 30%; exports were then banned shortly thereafter. A further $130 million was diverted to the state-owned mining holding company Corporacion Venezolana de Guyana to compensate workers for previous strikes and overtime. "It's clear the mining industry is not producing dividends for the state at the moment," Chavez concluded. For a time, Rusoro remained "optimistic." Following initial talks with Mining Minister Ramirez, according to Agapov, officials pledged compensation by fair market value in the name of Venezuela's good standing among capital markets. But not for long; "Then all the people who started to work with us on the settlement were proposing different things and much lower valuations," an exasperated Agapov later reported. "There was no way we could have accepted their numbers or conditions." In the end, "we lost it all," said Agapov. www.e-mj.com Crystallex of neglecting the project, dating back to the 1980s, for over a year for "reasons of opportunity and convenience." Crystallex officials countered in a release that they were effectively "shovel ready." It was no use. Crystallex was summarily forced into bankruptcy protection and de-listed from the Toronto Stock Exchange. Like Rusoro, company representatives are now seeking $3.8 billion in damages for a hearing before the World Bank's ICSID set for November. Like Rusoro, Chavez initially gave Crystallex a warm welcome: It was even awarded Las Cristinas over Canada's Infinito Gold Ltd., which claimed rights to the asset after Placer Dome International Corp. abandoned the project during a slowing of global market prices before its acquisition by Barrick Gold Corp. Chinese state-run investment company CITIC Group (formerly the China International Trust and Investment Corp.) has since stepped into the breach; an ICSID lawsuit by Infinito seeking $1 billion was later dismissed. Others are in the ongoing, seemingly uneventful fray. In 2008, for instance, Spokane, Washington-based Gold Reserve Inc. sued for $2.1 billion over the loss of its Las Brisas copper and gold mine—containing one of Latin America's biggest gold veins. Chavez's appropriations are not without their domestic critics, notably the Venezuelan Confederation of Industries, decrying an atmosphere that "creates legal uncertainty, drives investments away and reduces the possibility of increasing production." Jorge Botti, president of the Federation of Trade and Industry Chambers, called it a "fear factor." The factor continues, but it's too late for Venezuelan mining. In January, for the first time in his divisive rule, Hugo Chavez Frias missed his own inauguration amid months of chemotherapy treatment. But even without his presence, legions of the poor Venezuelans he empowered with mixed results cheered wildly. Less than two months later, he would lie in state—with all the stillness of his beloved country's mining sector. JULY 2013 • E&MJ; 65

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