Venezuela is moving to fully open its mining industry and has begun earnestly courting foreign capital.
On the 9th (local time), Venezuela's National Assembly unanimously passed a new mining law aimed at modernizing the aging mining industry and expanding development participation by foreign private corporations. It comes about two months after it approved amendments to the hydrocarbons law allowing foreign corporations to independently develop crude oil.
This is seen as effectively putting on the chopping block the sweeping nationalization measures pursued in succession by former President Hugo Chávez and continued by President Nicolás Maduro.
The new mining law is said to have been drafted with reference to the main elements of the hydrocarbons law amendments. Passed on Jan. 1, the hydrocarbons law amendments allow private corporations headquartered in Venezuela to participate in oil exploration and extraction. The corporations will be able to ▲ independently operate oil fields through new contract models, ▲ commercialize production, and ▲ receive sales revenue even when acting as a minority equity partner of the state oil company (PDVSA).
In particular, the law specifies that corporations that obtain mining permits will be provided remedies and safeguards against unilateral government seizure of asset. Previously, during the push for nationalization, former Venezuelan President Hugo Chávez unilaterally confiscated the assets of U.S. and Canadian corporations developing gold mines in Venezuela and forcibly adjusted PDVSA's equity ratios, creating an uncertain investment environment, and this is seen as a measure to prevent a recurrence.
The law also allows investors to resolve contract disputes with the government through arbitration and mediation procedures in addition to Venezuelan courts. In addition, four supervisory bodies are expected to be newly established, including the creation of a special unit within the National Guard to monitor mining areas. Through these steps, the plan is to bring the mining industry into the formal system and generate at least $8 billion in annual revenue by 2036.
In fact, Venezuela is estimated to hold one of the world's largest gold reserves. Along with rare earths, it possesses a range of strategic minerals, including ▲ bauxite ▲ iron ore ▲ coal ▲ copper ▲ nickel ▲ coltan, but most remain undeveloped.
In March, Acting President Delcy Rodríguez met with U.S. Interior Minister Doug Burgum and about 20 corporate representatives at the Miraflores presidential palace, reiterating her commitment to pushing mining reforms. Acting President Rodríguez was said to have expressed her determination that "reforms will ensure that investors secure both judicial stability and political certainty so they can expand investment."
However, some say these measures are somewhat removed from the realities of unstable local mining regions. Illegal mining is still rampant in Bolívar state in southeastern Venezuela and across the Amazon rainforest, and critics say legal enforcement will be difficult when gangs, guerrilla groups, and corrupt military officials effectively control mine operations.
In particular, there are calls for urgent public security measures given that armed groups such as the National Liberation Army (ELN), Colombia's largest guerrilla organization, are effectively acting as a "shadow government." Bram Ebus, an illegal mining expert and consultant, noted, "The Caracas government does not have effective governing authority in mining areas," adding, "It can pass laws, but on the ground it has to negotiate with other armed groups."
Meanwhile, Acting President Rodríguez is seen as closely communicating with the United States and shoring up her position with support from President Donald Trump. Under Venezuela's constitution, when the president is temporarily absent, the vice president can serve as acting president for up to 90 days, but Vice President Rodríguez has continued to carry out normal duties even though her legal acting term effectively expired on the 3rd. Observers say the Venezuelan government will enlist the Supreme Court to ensure that Acting President Rodríguez can extend her term without National Assembly approval.
Since Maduro's ouster, Acting President Rodríguez has strengthened her power base by replacing core Maduro confidants, including the defense minister and the prosecutor general, and recently broadened her room to maneuver after being recognized by the Trump administration and removed from the U.S. Treasury's Specially Designated Nationals (SDN) list. The International Monetary Fund (IMF) also recently surveyed its member countries on Venezuela, and is said to be pursuing normalization of relations with Venezuela.