Crystallex International

From the Editors of VenEconomy

In the past 20 years, Venezuela has had an unending chain of lost opportunities, particularly in the area of the economy, including mining.

There is Las Cristinas Mine, for example, located in the southeastern region of Bolívar state and with one of the most extraordinary gold deposits in Latin America. Unfortunately, their exploitation, along with the benefits that this would bring the nation, has been truncated by a series of arbitrary actions, lawsuits, and shady, tangled legal subterfuges, the upshot of which has been that it has still not been decided who should mine them.

It will be remembered that, after a drawn out process of horse trading, the Venezuelan Government, via the Corporación Venezolana de Guayana (CVG), went into partnership with the Canadian company Placer Dome, the world’s fifth largest gold mining company, to mine these deposits. However, for reasons that have not been explained, the Ministry for the Environment refused Placer Dome the permit to start mining Las Cristinas, despite the fact that it had obtained international financing, complied with all the legal and permitting requirements exacted by the Venezuelan State, and even implemented an extensive social program to benefit one of the country’s most depressed populations. Many think that it was because it did not “cough up.”

Finding it impossible to go ahead with exploiting the mine, Placer Dome sold its share in the Canadian company Vanessa Ventures, which then drew up a smaller scale mining project. But the Venezuelan state then rescinded the mining contract arguing procedural technicalities rather than issues of substance. Today, Vanessa Ventures is questioning the legality of this rescission of its contract in international arbitration courts.

Subsequently, the Venezuelan Government granted the right to mine Las Cristinas to Crystallex, another Canadian company.

Now the story of arbitrary actions and scams is being repeated. On Sunday, February 7, Crystallex announced that CVG had notified it that its contract to operate Las Cristinas Mine had been “unilaterally rescinded.” Crystallex had also complied with all the legal and permitting regulations established by the Venezuelan State, but had been prevented from exploiting the mine as the Ministry for the Environment had refused the corresponding permit, once again with no explanation of the reasons for this decision.

Rumor has it that Las Cristinas could fall into the hands of the Russian mining company Rusoro Mining.

The loser in this never-ending of disputes over and scams involving Las Cristinas is the Venezuelan nation.

If this situation were not so tragic, it would be comical.

VenEconomy has been a leading provider of consultancy on financial, political and economic data in Venezuela since 1982.