Venezuela won't be adding to world's gold supply

Venezuela Stops Open-Pits and Gold Mines

By Ana Isabel Martinez
Reuters
Thursday, May 15, 2008

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSN1...

CARACAS, Venezuela -- Mineral-laden Venezuela on Thursday shut the door to new gold projects and threatened other mining and logging concessions in a step by leftist President Hugo Chavez to tighten control of natural resources.

Environment Minister Yuviri Ortega said the South American country will not give permits for any open-pit mines and will not allow companies to look for gold in its vast Imataca Forest Reserve.

"Venezuela will deny environmental permits for the open-pit mine exploitation," Ortega told Reuters in an interview. "Neither private or public companies will for now explore Imataca's gold."

Citing ecological damage, Ortega said the government was also revising all its mining and timber concessions.

OPEC member Venezuela is one of the world's top oil exporters. With its coffers bulging from record crude prices, it feels it does not need to risk further harming its environment with more mining and logging.

"For the moment we do not need to exploit these minerals; as the president says, we don't need diamonds or gold or coal," she said, but did not give further details.

Much of the Caribbean state remains largely unpopulated and it houses diverse eco-systems including a significant chunk of the Amazon rain forest.

The ban on mining in the 9 million acre (3.8 million hectare) Imataca reserve and the end to permits for open pits was a blow to Crystallex and Gold Reserve. The Canadian companies have long been seeking environmental permits to exploit their concessions in the reserve.

Chavez last year launched a nationalization drive, increasing state control over the country's oil industry. The U.S critic has since taken over key sectors of the economy including electricity, telecoms, cement and steel companies.

He has been especially tough on foreign companies but typically pays a fair price for nationalized assets.

The Imataca reserve, which includes a town called El Dorado in remote southeastern Venezuela, sits on what is believed to be one of Latin America's largest gold deposits.

Several large and mainly state-run companies dig iron ore, coal, and bauxite in Venezuela. Workers last week halted operations at Venezuela's Isodora gold mine, owned by Hecla, demanding it be nationalized.

It was not clear if the U.S. miner would be affected by the new contract revisions.

Crystallex and Gold Reserve shares were largely unmoved on Thursday. The stocks have taken a battering in recent weeks as news filtered out suggesting the government would not give them permits.

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