Venezuela pushes out small gold miners as Maduro seeks more revenue

Venezuela pushes out small gold miners as Maduro seeks more revenue

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EL CALLAO/CARACAS, Sept 12 (Reuters) – In Venezuela’s El Callao mining region, countless small-scale artisanal miners who once sold gold to the government left the area last year because locally available supplies are depleted and the president Nicolas Maduro to make deals with larger mining companies, seeking to increase production and increase the income of the treasury.

Nationalization in 2011 forced out private gold miners and gold production stalled. Maduro now wants to ramp up production by forming “strategic alliances” with select private companies, dozens of sources told Reuters. These partnerships are driving informal miners out of places like El Callao in the country’s south, businessmen, government officials and miners say.

“They want more gold. This is what the state has always wanted,” said Alexis Chauran, director of the gold mining association in La Ramona in eastern Venezuela, near the border with Brazil.

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The government has granted permits to 12 private companies to build 30 refineries that use sophisticated equipment to extract gold sand from nearby mines, the sources said. Most of them are already running.

The move came after the cash-strapped government was forced to sell some of its existing central bank gold reserves while crude oil exports were capped by US sanctions and Venezuelan oil production fell.

The bank’s gold bullion reserves have decreased by 60 tons over four years. The stocks, equivalent to 73 tons or $4.33 billion, are the lowest in five decades, according to data on the bank’s website. read more

According to the latest government budget, this year’s gold royalty revenues are equivalent to $232 million, 70 times higher than forecasts for gold for 2021, but well behind oil revenues.

However, according to several sources, many of the new smelters cannot process serious quantities of gold because they depend on initial processing by small millers.

“The factories are monsters and many are running out of material because there are few millers and only a few tons are being processed,” said Vidal Garcia, owner of a mine in El Callao. “There used to be fewer factories and more miners.”

The Ministries of Mining and Communications and the State Mining Corporation did not respond to requests for comment.

The authorities did not disclose the terms of the alliances or the names of the companies involved.

‘REPLACED’

There are no official government figures, but the World Gold Council estimates that Venezuela’s gold production in 2021 was only 35 tonnes. Much of this has come from small-scale “wild” miners who often work in hazardous conditions.

The Maduro government has been buying gold from artisanal miners for years, selling it to allies for food and hard currency, a 2019 Reuters investigation found.

Now they are being pushed back.

Last year, artisanal miners faced a shortage of fuel and a shortage of mercury used to mine gold, but NGOs attribute this to water pollution and environmental damage. Many also accused government officials of extortion and complained of violence by illegal armed groups, according to sources and NGOs involved in the mines. In addition, the most accessible reserves of land-based gold were exhausted.

“Surface gold is running out in some areas,” one industry source said.

Some informal miners have been forced out by private companies.

Chauran said several miners had already arrived in his area after being forced out of other parts of Bolivar state.

Elsewhere, some say the state-owned mining corporation is pressuring some miners to work with government partners, although the terms of the contract are unclear.

Diomar Perez, a gold dealer in El Callao, said he bought 200 grams of gold a day from artisanal miners. Now he buys only 10 grams.

“Gold doesn’t reach these places anymore.”

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Reporting by Maria Ramirez in El Callao and Maiela Armas in Caracas, text by Isabelle Woodford, edited by Vivian Secker, Adam Jourdan and David Gregorio

Our standards: Thomson Reuters Trust Principles.

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