Canadians could play role in Venezuela’s mining sector

A senior official of Venezuela’s Ministry of Energy and Mines was in Toronto earlier this month to attract Canadian investment. Until recently, foreign mining companies have been restricted from investing in Venezuela largely by the absence of modern mining laws and lack of efficient means for allocating exploration permits and mining concessions.

But all that is beginning to change, according to Rafael Guevara, Venezuela’s new Vice-Minister of Energy and Mines. He was in Toronto recently for a 1-day seminar to acquaint Canadian mining executives with his country’s new mining law, announced last December.

In an interview with The Northern Miner, Guevara said Venezuela’s new mining policy is designed to “open frontiers toward more foreign investment.”

By meeting directly with officials of several Canadian mining companies, Guevara hoped to clarify any doubts they might have about investing in Venezuela. He said the country’s new mining policy includes measures to stimulate more exploration and prospecting activity, as well as a revised concession granting system, and new tax treatment for mining activities.

He said the development of his country’s gold and base metal mining sector has now become a top priority for government policy makers. Up until now, Venezuela’s mining industry had been virtually ignored while the country focused on its more important petroleum industry.

For years, the petroleum sector accounted for more than 90% of Venezuela’s export income, and until the financial collapse of 1983, Venezuela was considered the richest country in Latin America.

But, the drop in oil prices by more than 50% in 1986 changed the country’s economic outlook drastically.

To foster more growth in its mineral sector, the Venezuelan government is now encouraging foreign investment in both private and state- owned companies by cutting red tape, eliminating controls on profit remittances and offering stakes in state-owned companies through debt swaps.

During his visit, Guevara met with executives from Canadian mining companies, including Tom Burnett of Inco, senior geologist James Robertson of Falconbridge, as well as Placer Dome’s Chairman Fraser Fell, and George Vooro, president of Hillsborough Resources.

Accompanying Guevara during his visit was John Needham, managing director of the Canadian Association of Mining Equipment and Services for Export, which is based in Willowdale, Ont.

As well, Cominco, which has been expressing serious interest in the potential of base metal projects in Venezuela, is looking at a large zinc deposit known as Bailadores. It has the potential to support a 15- to 20-year zinc mining operation, according to Guevara.

Meanwhile, gold production in Venezuela fell to 15 tonnes last year, down from a total of about 20 tonnes in 1988, according to Gold Fields Mineral Services. Output was reduced because of rising production costs, heavy rain and action taken by the authorities against informal miners in the province of Guyana. At present, nearly 90% of production is from small-scale independent operations.

The country’s new mining law, however, is expected to attract foreign companies and establish gold mining on a more organized basis.