Chavez signs decree formalizing nationalization of gold mining industry

CARACAS, Venezuela — President Hugo Chavez has signed a decree formalizing the nationalization of Venezuela’s gold mining industry.

CARACAS, Venezuela — President Hugo Chavez has signed a decree formalizing the nationalization of Venezuela’s gold mining industry.

The move Tuesday is aimed at giving the government total control over gold produced in the South American country.

Chavez has not offered details on how the new decree differs from a 1965 law that nationalized gold mining. But he suggested on Tuesday the measure would give authorities increased powers to evict wildcat miners from illegal mines.

Chavez also announced the repatriation of US$11 billion in Venezuelan gold reserves currently held in U.S. and European banks would begin within several weeks.

The nationalization move dragged down the shares of at least one Canadian-traded gold producer.

Vancouver-based Rusoro Mining Ltd. (TSXV:RML), one of the few publicly traded gold miners active in Venezuela, dropped two cents to 12 cents, a decline of 14.3 per cent.

About 236,000 shares traded hands on the TSX Venture Exchange.

Earlier this year, Rusoro said it expects to produce 98,000 ounces of finished gold from its open pit Choco mine and its half-interest in the Isadora underground mine in Venezuela that is a joint venture with the government.

Last week, Rusoro said it has had no indication from the government “of any changes to the company’s operations.”

Rusoro also said it believes the gold sector crackdown is meant to stop widespread illegal mining operations and smuggling within the remote southeastern region of the country.

“We believe the government’s announcement is targeted toward the many illegal mining operations in Bolivar state that operate without government permits and continue to cause significant environmental damage,” Rusoro president and CEO Andre Agapov said in a statement last Thursday.

He added that informal mining operations destroy forests and pollute rivers with mercury.

“Gold produced by these illegal operations is often smuggled out of the country or sold illegally, and the government is now taking action.”

With files from The Canadian Press

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