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Venezuela to Nationalize Country’s Largest Gold Mine Las Cristinas

Mérida, November 6, 2008 (venezuelanalysis.com)-- By 2009, the Venezuelan government plans to nationalize the Las Cristinas gold mine, which is estimated to have the largest gold deposits in the country and is currently conceded to the Canadian company Crystallex, the Minister of Basic Industries and Mining (MIBAM), Rodolfo Sanz, announced Tuesday.

"We hope to exploit the Las Cristinas mine, which was previously owned by the transnational [company] Crystallex, by 2009," said Sanz in a radio interview. "The mine will be recuperated and operated under state administration."

In a press release Wednesday, Crystallex stated that it is aware of Sanz's comments, but "The company has not been notified of any changes in position by the MIBAM regarding the Las Cristinas Project."

Las Cristinas, located in a section of the Imataca Forest National Park in southeastern Bolívar state, is Crystallex's principal asset in Venezuela, according to company financial reports. Estimates of its gold deposits range between 12 million and 31 million ounces.

Venezuela's state mining corporation, CVG, conceded the Las Cristinas mine to Crystallex in 2002, but did not provide final approval for its operation. In 2007, despite reports by miners' rights organizations that Crystallex was already violating workers' rights agreements and assaulting small-scale miners in the region, Venezuela's Environment Ministry assured the project was on track for approval.

Last April, however, the ministry denied the final permit for the mine and said Crystallex's concession would be reconsidered. In May, the ministry announced, "Neither private nor public companies will for now exploit the Imataca's gold."

In June, after a hearing in the Venezuelan National Assembly, Crystallex assured its shareholders that several government ministries support its participation in Las Cristinas.

Now, the state now plans to halt small-scale mining and to industrialize, under state management, the production of strategic minerals, including gold, diamonds, bauxite, and uranium, Minister Sanz stated Tuesday.

"Because of the financial crisis that has expanded on a worldwide scale, it is necessary to try to recuperate our gold to increase our international reserves," said the minister, adding that this will help Venezuela generate employment and control environmental contamination.

Sanz said the state-owned company MINERVA has already taken control of and begun industrializing two other gold mines, La Camorra and Revemin. Revemin is another project in which Crystallex has a financial stake, according to company reports.

According to the minister, these two mines produce slightly less than twenty kilograms of gold per day. "This is a production hike of 100% in only three months," he said, adding that the state plans to nearly double its gold production in 2009 to 8.2 tons.

Miners decry "constant violations of human rights being carried out by the management," and have demanded the nationalization of Venezuela's largest active gold mine, Isadora, which is owned by Idaho-based Hecla, but the government has yet to respond.

Sanz said the state also plans to nationalize and industrialize several diamond mines in the Guaniamo zone.

This is all part of the government's broader plan, announced after Chávez's re-election in 2006, to take control of what it says are strategic industries. So far, the government has nationalized or purchased controlling shares of joint venture oil production projects, its largest steel plant, the third largest bank, and the cement, telecommunications, and electricity industries.

Published on Nov 6th 2008 at 10.17pm