Caracas, March 10th (Argus) - The National Assembly controlled by the ruling party of Venezuela passed a new mining law on Monday evening, aiming to open up more investment to the industry and paving the way for the second discussion needed in the coming days.
According to the proposed reforms, the executive branch will still authorize all mining activities, but it will also allow private sector operators and joint ventures formed with the government, where the government can hold a certain percentage of the controlling stake. According to the proposed reforms, fully private companies can also conduct mining if they obtain permission.
In addition to other changes, investors can seek international arbitration in disputes. But a former government mining official told Argus that the proposal would not be as independent as some potential investors hoped for, establishing an independent mining licensing agency.
The source said, "The government is still the controller, but the arbitration and other major changes may be sufficient to affect investors."
About 13% of the royalties - the same as the applicable regulations in 1999 - will be collected in addition to the 3%-4% surface tax, rather than a uniform 3%.
Last week, US Interior Secretary Doug Burgum met with interim President Delcy Rodriguez and other Venezuelan officials in Caracas, taking the first step in the passage of the reform. At that time, Burgum said that more than 20 US private enterprises were interested in conducting business in the mining industry in this oil-rich country, including extracting key minerals.
After the overthrow of the then president Nicolas Maduro on January 3rd, the US claimed to actually control Venezuela's oil and other commodity industries, and the changes in the mining sector occurred after similar openness in the oil and gas fields.
According to data from the Venezuelan International Productive Investment Center (CIIP) created by Burgum during his tenure as Vice President of Maduro, Venezuela may have 14.7 billion tons of iron ore for steel production and 321 million tons of bauxite for aluminum manufacturing. If these data are confirmed, Venezuela will join the ranks of the world's largest holders of rare earth resources.
Venezuela may have up to 8,000 tons of gold. In contrast, the US Geological Survey data shows that the total underground reserves worldwide are approximately 57,000 tons. The figures from CIIP are unaudited and are estimated figures. The US recently allowed Venezuela to sell some gold under sanctions exemptions.
