Minas

MINING

Venezuela is a country with extraordinary mining potential. Almost any mineral, metallic or otherwise, is found in Venezuela. However, Venezuela's mining industry is relatively underdeveloped in comparison with industry levels in other Latin American countries. The vast Venezuelan territory was explored as early as the XVI century by voracious German bankers in search of preciousmineral resources. British, French, South African, Italian, Canadian and US miners, just to name a few nationalities, have looked for diverse types of minerals throughout Venezuela, but only a handful of projects have reached sustained production status.
Mining legislation in Venezuela is either federal or state. While federal legislation is applicable to metallic minerals, state legislation applies tonon-metallic minerals and varies from state to state. Currently, there are 23 states in Venezuela. Non-metallic minerals located in the Capital District are also subject to special legislation.
Generally, the big mining projects have significant government participation or are controlled by the State. This is particularly the case with the iron industry, nationalized more than 30 years ago,with the gold industry, nationalized in 2011, and with bauxite and coal projects. Private entities have been successful in developing major projects, like the nickel mining project not far from the city of Caracas. Nonetheless, copper, gold and diamond production add very little to Venezuela's GDP. There is no officially reported production of uranium, cadmium, molybdenum and similar minerals,although newspapers every now and then comment on alleged Venezuelan production.
Since 1855 a succession of laws has regulated the mining sector. The current Mining Law was enacted in 1999, and in some instances is an improvement over its predecessor from 1944.
In addition to the basic legal framework specific to mining, a number of foreign investment regulations, tax regulations and environmentalregulations are equally applicable to the mining industry. As mentioned before, iron and gold mining are subject to special legislation. Usually compliance with non-mining legislation is a prerequisite to conduct mining activities, and at times mining projects remain suspended for years until all bureaucratic paperwork, permits and clearances are obtained. The main administrative body in charge ofsupervising and controlling mining activities at the Federal level is the Ministry of Petroleum and Mining, which replaced the now defunct Ministry of Basic Industries and Mining. As can be perceived from the juncture of areas of in the two ministries, mining was and still is somewhat ancillary to other main industrial activities.
During the last few years, the current administration has beenworking on restructuring mining policy throughout the country. Gold mining was very recently reserved to the State, where private participation is only allowed through shareholding of less than 45 % of the capital stock of mixed companies under State control. The expected new general mining policy will lead to an industry structure similar to the current structure of the oil industry. Accordingly,mining activities will be conducted directly by the State, by wholly-owned State entities or by mixed companies allowing for private participation, but in which the State holds more than 50% of the capital stock. Small mining activities will also be permitted in designated areas. Notwithstanding the foregoing, the date of adoption of this anticipated general reform is still uncertain.
Venezuelanmining legislation is based on the civil-royalty principle whereby all minerals belong to the State. Therefore, minerals are part of the public domain, inalienable, not subject to acquisition by adverse possession, and as a consequence thereof private mining activities require a government authorization. Although the Mining Law establishes five alternatives for exercising mining activities (directly...