Events Affecting Gold Exploration in Venezuela 

Since 1999

By David R. Wilburn

Open-File Report 2014–1068

U.S. Department of the Interior

U.S. Geological Survey
U.S. Department of the Interior

SALLY JEWELL, Secretary

U.S. Geological Survey

Suzette M. Kimball, Acting Director

U.S. Geological Survey, Reston, Virginia: 2014

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Suggested citation:

Wilburn, D.R., 2014, Events affecting gold exploration in Venezuela since 1999:

U.S. Geological Survey Open-File Report 2014–1068, 8 p., http://dx.doi.org/10.3133/ofr20141068.

ISSN 2331-1258 (online)
iii

Contents

Abstract .....................................................................................................................................................................1

Introduction................................................................................................................................................................1

Legislative Actions and Industry Response ...............................................................................................................1

Future Activities .........................................................................................................................................................5

References Cited.......................................................................................................................................................5

Tables

1. Gold exploration activities in Venezuela from 2002 through 2012

(Available at http://pubs.usgs.gov/ofr/2014/1068/)

2. Legislation governing mineral exploration in Venezuela since 1999.............................................................4

1

Events Affecting Gold Exploration in Venezuela 

Since 1999

By David R. Wilburn

Abstract

The structure of the gold mining industry in Venezuela has changed significantly since 1999 as a 

result of Government policy changes and industry response to these changes. This report documents the 

policy decisions that have affected the mining industry, discusses the response of the industry on a site 

by site basis, and suggests possible effects of these changes on the global economy. For the short term, 

at least, it appears that these changes have made Venezuela a more difficult place to invest for U.S. and 

Canadian companies, while investment by Chinese entities has been encouraged.

Introduction

Mineral exploration activity in Venezuela changed significantly over approximately the last 

decade. Changes were primarily the result of Government policies instituted by Venezuela’s President 

following the election in 1998 and the response of the foreign mining industry to these policies. This 

President followed a path of “21st Century Socialism” that gradually increased Government control of 

the country’s mineral resources and the exploration and mining of those resources, as well as mandated 

changes that increased domestic ownership and retained a greater portion of production and revenue in 

the country (Central Intelligence Agency, 2011). These changes led to a restructuring of the Venezuelan 

mining industry and a decline in gold exploration activities by foreign companies. Although Venezuelan 

gold production increased 76 percent from 1999 through 2005, the estimated growth in gold production 

from 2006 through 2011 was only slightly more than 3 percent. It should be noted, however, that 2004 

was the last year for which official production statistics were provided to the U.S. Geological Survey 

(USGS) (Gurmendi, 2011).

Legislative Actions and Industry Response

The nationalization process, begun after the change in the Venezuelan government in 1998, 

coupled with an uncertain macroeconomic environment characterized by high inflation and foreign 

exchange controls, led to reduced foreign investment in mineral exploration and mining by private firms 

(Gurmendi, 2011). In 1999, the Venezuelan Congress passed legislation (Enabling Law of 1999) that 

gave the President temporary powers to rule by decree (U.S. Department of State, 2000). One of the first 

actions of the new President was to revise the mining code (Decree No. 295). Under the new mining 

law, a combined exploration/mining concession was permitted for a 20-year period, renewable for a 

period not to exceed 20 years; exploration concessions granted by the Government were limited to 3 

years, with a possible extension of 1 year. At the expiration of a concession, assets were to become the 

property of Venezuela without compensation (Torres, 2002). Legislation passed in 2001 (Decree No. 
2

1234) established terms, conditions, and administrative procedures in support of the 1999 mining law. It 

also reestablished the Corporación Venezolana de Guayana Minerven C.A. (CVGMinerven) and its 

subsidiaries as the State mining company (Torres, 2003). In 2002, the Venezuelan economy entered a 

recession, which led to political unrest, a national strike that continued into 2003, and the introduction 

of currency controls in 2003 (Sullivan, 2009; U.S. Department of State, 2012). Economic conditions 

improved in 2004, and the Government stimulated mineral exploration activity with the issuance of 

Decree 3110, which redefined the permissible uses of the Itacama Forest Reserve to allow potential 

development of the feasibility-stage Las Cristinas gold deposit and exploration of other early-stage gold 

deposits. Government consolidation of the mining industry continued in 2005 with the annulment of 

inactive gold and diamond concessions held by private companies and the suspension of exploration and 

mining permits of concessions where procedures deemed inappropriate by the Government had taken 

place. The Government also initiated a review of existing concession contracts with the goal of 

changing them to joint ventures in which the Government would hold at least 60 percent interest 

(Torres, 2007). In addition, Decree No. 3895 (September 2005) guaranteed that mineral producers 

would supply the needs of domestic mineral processing companies before they could export products 

under higher priced, long-term export contracts.

Data compiled by the USGS on gold exploration activities suggest that these conditions have led 

to a steady decline in exploration activity by foreign companies in Venezuela during the last decade. In 

2002, six foreign companies were conducting active exploration programs on six sites. In 2004, Decree 

2110 permitted the opening of the Itacama Forest Reserve to exploration, and 12 foreign companies 

began to actively conduct mineral exploration on multiple sites in Venezuela. Nationalization actions 

initiated by the Venezuelan Government in 2005 resulted in a sizeable decrease in mineral exploration 

activities, such that only six companies conducted active exploration in 2005. Only three companies, 

Rusoro Mining Ltd. (Rusoro) (Canada), Shandong Gold Mining Company Ltd. (China), and ValGold 

Resources Ltd. (Canada) were actively involved in gold exploration in Venezuela from 2005 to 2009. 

Data suggest that industry nationalizations, recent legislation, and repatriation delays have tended to 

discourage gold exploration by some Australian, Canadian, and U.S. companies. At the same time, the 

Government of Venezuela has encouraged China to invest in gold mining as part of a goal to get the 

China Development Bank to lend the Government development funds against future gold production 

(Arson and Davidow, 2011; U.S. Department of State, 2013).

By 2009, Government-mandated restructuring of gold mining companies and expropriation of 

mineral exploration concessions left the country with only one foreign mining company, Rusoro, a 

Canadian-Russian controlled company operating under a joint venture agreement with Venezuelan State 

mining company CVGMinerven. Up to December 15, 2011, Rusoro was engaged in the acquisition, 

exploration, development, and operation of gold properties in Venezuela. Nationalization of the 

Venezuelan gold mining industry was formalized in 2011 with Decree No. 8413 giving the Government 

of Venezuela exclusive rights for the extraction of gold in Venezuela, prohibiting export of gold, and 

requiring that the State have a minimum 55 percent interest in all exploration and mining ventures 

(Vyas, 2011). Private companies were still allowed to participate but only as minority partners in a 

mixed-interest joint venture enterprise, with CRVMinerven (a Venezuelan-Government-owned 

company) holding 55 percent ownership. A second provision of the 2011 decree required that future 

legal disputes be resolved in Venezuelan courts (Canadian Business, 2011). This action was likely in 

response to the filing for international arbitration by three mineral exploration companies (Vanessa 

Ventures Ltd, Gold Reserve Inc., and Crystallex International Corp.) that claimed they were entitled to 

financial reimbursement for assets that were expropriated.
3

Decree No. 8413 provided a 90-day period (September 16, 2011, to December 15, 2011) for the 

Government of Venezuela and the companies to negotiate the terms and conditions of the migration of 

the company’s mining assets to the Government-controlled mixed enterprise; Decree No. 8683 

subsequently extended this process for an additional 90 days to March 14, 2012 (Gurmendi, 2012). 

Because Rusoro was unable to agree upon the terms and conditions, its mining concessions expired and 

its assets reverted to the Venezuelan Government as of March 14, 2012 (Rusoro Mining Limited, 2011). 

On July 17, 2012, Rusoro filed a request for arbitration with the World Bank’s International Centre for 

Settlement of Investment Disputes (ICSID) (Rusoro Mining Limited, 2012). Venezuela withdrew from 

the ICSID in January 2012 and no new cases could be brought against it after July 25, 2012.

The incentive for gold exploration in Venezuela has been adversely affected not only by recent 

nationalization actions but also by actions that influence mining company profitability and resource 

access. The Central Bank of Venezuela (CBV) passed Resolution 10-01-01 in 2010, which mandated 

that 50 percent of the gold produced in Venezuela be offered for sale to CBV; if permission was 

obtained by CBV, the remaining 50 percent could be exported or offered for sale to CBV. CBV had the 

right to set the currency sale price and exchange rates. For much of 2010, the CBV gold sales price was 

based on the international U.S. dollar spot gold price less a discount of 1.5 percent, with payment 

received in Venezuelan bolívar fuerte (Bs.F.) at the official exchange rate of Bs.F. 2.15/$1.00 

(December 31, 2009) and Bs.F. 4.30/$1.00 (December 31, 2010). As a result, Rusoro reported a foreign 

exchange loss of $100.8 million in 2010 compared to a foreign exchange gain of $1.1 million in 2009 

(Rusoro Mining Limited, 2010). In 2009, Rusoro was able to sell a greater quantity of gold at a higher 

fixed-contract gold price to foreign markets. Foreign companies claimed that the 2011 decree that 

required all gold produced in Venezuela to be sold to the CBV would affect company profitability, 

particularly when the gold price set by CBV was lower than the international market price for gold 

(Rusoro Mining Limited, 2011). Also in 2011, a decision was announced to repatriate 211 tons of 

foreign-held gold reserves to the CBV and Venezuelan cash reserves to banks in Brazil, China, and 

Russia (U.S. Department of State, 2011).

Table 1 (available separately at http://pubs.usgs.gov/ofr/2014/1068/) summarizes annual gold 

exploration activities and developments that affected exploration in Venezuela by site during the period 

2002 through 2012. In 2002, 12 sites were actively being explored or mined by foreign interests. 

Production at two sites was curtailed in 2012, owing to payment and equipment delivery issues 

(Business News Americas, 2012). By 2013, after nationalization, exploration activity was taking place 

at five sites, and production continued at two sites. All exploration for and production of gold in 2013 

was conducted by CVGMinerven, a Venezuelan-Government-owned company.

Table 2 shows key legislation or legislative activity governing mineral exploration and mining in 

Venezuela since 1999. Also shown are key actions by the Venezuelan Government and private interests 

resulting from this legislation.
4

Table 2. Legislation governing mineral exploration in Venezuela since 1999.

Year Legislation Actions

1999 Enabling Law of 1999 Provided President power to rule by decree.

1999 Decree No. 295 Revised mining code governing the exploration, development, production, 

marketing, and transportation of all minerals.

Mining is permitted only through direct participation of Government.

Exploration and mining concessions are permitted for a 20-year period subject to 

Government review.

Exploration concessions are permitted for 3 years, with possible 1-year 

extension.

At expiration of a concession, assets revert to Government without 

compensation.

2001 Decree No. 1234 Established terms, conditions, and administrative procedures in support of 

Decree No. 295.

Established that the Government has a right of 30 percent of production revenues 

as royalty payment.

Reestablished Corporación Venezolana de Guayana Minerven C.A. 

(CVGMinerven) and exempted CVGMinerven from tax payments.

2004 Decree No. 3110 Redefined permitted uses of Itacama Forest Reserve, which allowed exploration 

and potential development of Las Cristinas deposit.

2005 Unspecified legislation Created new ministry to oversee mining-related activities.

Annulled inactive gold and diamond concessions and suspended permits in cases 

where appropriate processes had not been followed.

Stopped granting mining concessions for diamond and gold to private sector 

companies; all existing mining concessions and contracts were to be reviewed 

with the goal of changing them to joint ventures in which the Government would 

hold at least 60 percent interest.

2005 Decree No. 3895 Required mineral producers to meet domestic needs before export contracts, 

ensuring domestic mineral processing supply or raw materials and semifinished 

products.

2007 Unspecified legislation Initiated foreign exchange controls, requiring Government approval for export of 

funds.

Legislature defeated proposal that would allow President to expropriate private 

property by decree.

2010 Transaction System for 

Foreign Currency 

Denominated 

Securities

In January, devalued tier 1 currency to 2.60 Venezuelan bolívar fuerte (Bs.F.): 

1 U.S. dollar; tier 2 currency to 4.30 Bs.F.: 1 U.S. dollar. In December, 

established uniform exchange rate of 4.30 Bs.F.: U.S. dollar. Increased allowance 

of gold exports to reach 50 percent of production.

2011 Decree No. 8413 Gave State exclusive right for the extraction of gold in Venezuela and banned 

gold exports. 

Nationalization decree gave companies 90 days to form joint venture with 

Government enterprise, where Government retains 55 percent ownership and 

receives 13 percent royalties. If company fails to reach agreement, all company 

concessions, contracts, and assets revert to the Government.

2011 Decree No. 8683 Negotiation period deadline extended by an additional 90 days to March 14, 

2012.

2012 Industry response Three gold mining arbitration cases in international court.

Rusoro Mining Limited filed request for international arbitration.

Rusoro assets reverted to the Government of Venezuela; CVGMinerven, a 

Government-owned company, assumed control of Rusoro mines.
5

Future Activities 

Economic and political uncertainties, a history of actual and threatened nationalizations, 

increased Government intervention in the economy, and a restrictive legal framework make Venezuela’s 

investment climate less welcoming than it once was. Although no prior registration is generally required 

for foreign investment, subsequent registration with the Superintendent of Foreign Investments is 

required. Repatriation of capital and dividends is legally allowed but is subject to the exchange rate 

regime. In practice, few companies have been able to repatriate dividends since 2008 (Gurmendi, 2014). 

Foreign currency brought in to cover local expenses that are exchanged at the official rate made 

investment costs high. Foreign direct investment (FDI) into Venezuela in recent years has lagged behind 

that of most other Latin American countries. The uncertain macroeconomic and political environment of 

Venezuela could continue to discourage the level of private mineral exploration and investment in the 

country until the legal framework and economic conditions in the country change significantly.

Venezuelan voters elected a new President in 2013; the new administration is continuing existing 

nationalization policies of the mining industry. It is possible that Venezuela will continue to encourage 

investment and strategic alliances with companies from Brazil, China, Iran, Italy, and Russia as a means 

of continuing production of its existing mining operations and to develop its abundant natural resources, 

perhaps by means of infrastructure for resource deals similar to those being structured in parts of Africa.

It is also unclear whether the change in administration would affect the 2012 memorandum of 

understanding between Chinese and Venezuelan officials that has the potential to provide investment 

funds that may be used for the development of the Brisas and Las Cristinas gold deposits (Williams, 

2012). As of 2007, Las Cristinas had a reported proven and probable reserve of 464.4 million metric 

tons grading 1.13 grams per metric ton (g/t) gold containing 16.9 million troy ounces, or the equivalent 

of 525 metric tons of gold (Crystallex International Corporation, 2007).

A number of gold-related mining companies have filed claims against the Venezuelan 

Government. As of January 2013, only one claim has received a ruling by the ICSID, which dismissed 

claims brought by Vannessa Ventures Ltd. on mining and energy seizures that started in 1999, ruling 

that the mining company’s rights under the Canada-Venezuela bilateral investment treaty were not 

violated (Crooks and Orozco, 2013). Venezuela is facing 29 pending cases at the ICSID, of which 4 

involve gold mining companies.

References Cited

Arson, C.J., and Davidow, Jeffrey, eds., 2011, China, Latin America, and the United States—The New 

Triangle 2011: Woodrow Wilson International Center for Scholars, Institute of the Americas, Chinese 

Academy of Social Sciences, 33 p., accessed October 17, 2013, at 

http://www.wilsoncenter.org/sites/default/files/LAP_120810_Triangle_rpt.pdf.

Business News Americas, 2012, Minerven contractors hold 30-hour rally, demand US$18mn, accessed 

July 10, 2013, at http://bnamericas.com/news/mining/minerven-contractors-hold-30-hour-rallydemand-US18mn#.

Canadian Business, 2011 (September 22), Rusoro Mining says Venezuela wants 55 per cent ownership 

of new gold company: Toronto, Ontario, Canada, Canadian Press, accessed September 29, 2011, at 

http://www.canadianbusiness.com/print/46874.

Central Intelligence Agency, 2011, The world factbook, accessed January 7, 2014, at 

https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html.
6

Crooks, Nathan, and Orozco, Jose, 2013, World Bank court rules for Venezuela in gold mining case: 

Bloomberg.com, January 18, accessed June 24, 2013, at http://www.bloomberg.com/news/print/2013-

01-18/world-bank-court-rules-for-venezuela-in-mining-case-correct.html.

Crystallex International Corporation, 2007, Crystallex updates resource and reserve estimates for the 

Las Cristinas deposit, September 24, accessed October 21, 2013, at 

http://www.crystallex.com/News/PressReleases/PressReleaseDetails/2007/CrystallexUpdatesResourc

eandReserveEstimatesfortheLasCristinasDeposit987/default.aspx.

Gurmendi, A.C., 2011, The mineral industry of Venezuela, in Area reports—International—Latin 

America and Canada: U.S. Geological Survey Minerals Yearbook 2009, v. III, p. 18.1–18.9. (Also 

available at http://minerals.er.usgs.gov/minerals/pubs/country/2009/myb3-2009-ve.pdf.)

Gurmendi, A.C., 2012, The mineral industry of Venezuela (Advance release), in Area reports—

International—Latin America and Canada: U.S. Geological Survey Minerals Yearbook 2011, v. III, p. 

16.1–16.10, accessed March 26, 2014, at 

http://minerals.er.usgs.gov/minerals/pubs/country/2011/myb3-2011-ve.pdf.

Gurmendi, A.C., 2014, The mineral industry of Venezuela (Advance release), in Area reports—

International—Latin America and Canada: U.S. Geological Survey Minerals Yearbook 2012, v. III, p. 

15.1-15.9, accessed March 26, 2014, at http://minerals.er.usgs.gov/minerals/pubs/country/2012/myb3-

2012-ve.pdf. 

Rusoro Mining Limited, 2010, 2010 Management discussion & analysis, 26 p., accessed September 26, 

2011, at http://www.rusoro.com/i/pdf/2020-YE-MDA.pdf.

Rusoro Mining Limited, 2011, 2011 Management discussion & analysis, 23 p., accessed June 12, 2013, 

at http://www.rusoro.com/i/pdf/2011-MDA-DEC31.pdf.

Rusoro Mining Limited, 2012, Rusoro files international arbitration against the Venezuelan 

Government, press release, accessed June 25, 2013, at 

http://www.rusoro.com/s/News_Releases.asp?printVersion=now&ReportID=537416.

Sullivan, M.P., 2009, Venezuela—Political conditions and U.S. policy: Congressional Research Service 

Report RL32488, July 28, accessed November 15, 2012, at 

http://www.fas.org/sgp/crs/row/RL32488.pdf.

Torres, I.E., 2002, The mineral industry of Venezuela, in Area reports—International—Latin America 

and Canada: U.S. Geological Survey Minerals Yearbook 2000, v. III, p. 17.1–17.8. (Also available at 

http://minerals.er.usgs.gov/minerals/pubs/country/2000/9523000.pdf.)

Torres, I.E., 2003, The mineral industry of Venezuela, in Area reports—International—Latin America 

and Canada: U.S. Geological Survey Minerals Yearbook 2001, v. III, p. 17.1–17.11. (Also available at 

http://minerals.er.usgs.gov/minerals/pubs/country/2001/vemyb01r.pdf.)

Torres, I.E., 2007, The mineral industry of Venezuela, in Area reports—International—Latin America 

and Canada: U.S. Geological Survey Minerals Yearbook 2005, v. III, p. 16.1–16.9. (Also available at 

http://minerals.er.usgs.gov/minerals/pubs/country/2005/myb3-2005-ve.pdf.)

U.S. Department of State, 2000, Venezuela—1999 country reports on economic policy and trade 

practices: U.S. Department of State, March, 13 p., accessed September 23, 2011, at 

http://www.state.gov/www/issues/economic/trade_reports/1999/venezuel.pdf.

U.S. Department of State, 2011, Background note—Venezuela, accessed September 28, 2011, at 

http://www.state.gov/r/pa/ei/bgn/35766.htm.

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2012, at http://travel.state.gov/travel/cis_pa_tw/cis/cis_1059.html.

U.S. Department of State, 2013, Venezuela—2012 investment climate statement, accessed June 21, 

2013, at http://www.state.gov/e/eb/rls/othr/ics/2012/191262.htm.
7

Vyas, Kejal, 2011, Venezuela bans gold exports—State to hold 55% in mining ventures: Wall Street 

Journal Online, September 19, accessed September 23, 2011, at 

http://online.wsj.com/article/SB10001424053111904194604576581012740465784.html.

Williams, Lawrence, 2012, Next Chinese gold target—Venezuela’s huge Las Cristinas project, accessed 

September 24, 2012, at http://www.mineweb.com/mineweb/content/en/mineweb-goldnews?oid=159038&sn=Detail.
ISSN 2331-1258 (online)

http://dx.doi.org/10.3133/ofr2014xxxx