Venezuela signs $4.5b mining deal

Venezuela signs $4.5b mining deal

Venezuelan President Nicolas Maduro has signed eight agreements totalling US$4.5 billion with national and transnational mining firms.

The deals mark the first round of agreements in the government’s controversial Orinoco Mining Arc, which will open 112km2 of the south-eastern state of Amazonas to open-pit mining. This will be equivalent to 12% of Venezuela’s territory.

A contract with Canadian mining company Gold Reserve (OTCMKTS:GDRZF) is among the deals to form a joint venture for copper and gold exploration and mining projects.

Gold Reserve was active in the country until 2009 when President Hugo Chávez stopped the firm’s Las Brisas modification over environmental concerns. Maduro signed a $5 billion deal with the company in February settling the conflict.

According to the newly formed Ministry of Ecological Mining, the Gold Reserve contract is expected to last 27 years and will generate $14 billion in revenue for Venezuela.

In addition to the Gold Reserve deal, Maduro signed a $330 million agreement with the Faox Corporation for the extraction of 5,000 tonnes of coltan, which is anticipated to return $10.2 million.

Venezuela is guaranteed 55% of all profits under the contracts.

Maduro also approved new executive orders including one mandating that 60% of all revenue from the mega-projects go towards social programmes and the other prohibiting the use of mercury in all mining activities.

“The new mining development policy is profoundly environmentalist, independent, and with a vision towards balanced development,” said Maduro.

The country’s head of state signed a memorandum of understanding with other national and transnational mining companies including Energold Metals of Canada, Supercal from Argentina, US-Canadian Guaniamo Mining Company and Venezuela’s Hydrocal CA and Minera de Nueva Esparta.