Roberto Mendoza (Caracas)
Tel: (58-2) 276-5111
Fax: (58-2) 264-1532
Unfortunately, the paralysis of the mining sector continues. Gold and diamonds are the most affected since it is in this area that the lack of definition causes the most problems. The exploration and mining of gold and diamonds in the Guayana region was first partially entrusted to Corporación Venezolana de Guayana (CVG), then ascribed to it since 1990 and, finally, delegated to said corporation by virtue of Decree No. 3,281.
Since it assumed power 2 years ago, the current administration suspended the awarding of mining rights in Guayana for 2 reasons: (i) to audit the agreements entered into by CVG, many of which were presumed to be defaulted on and/or in some cases had been awarded in a "frivolous" manner, and (ii) to eliminate the dual authorities over mining of gold and diamonds in Guayana, and return to the traditional scheme of complete authority in the hands of the Ministry of Energy and Mines (MEM). The MEM believes it is necessary to first approve a new mining law (or a law of "mining development" as referred to in the bill submitted by the MEM to Congress).
Currently there is no clearly defined authority with regard to gold and diamonds. Although CVG in theory is still empowered by Decree No. 3,281, in practice it has been silenced and deprived of its powers by MEM officials who control the country's mining policies. In turn, MEM is not empowered to assume control over these minerals while Decree No. 3,281 has not been repealed. It is not clear why it is necessary to wait for a new mining law to abrogate the decree. Reportedly the audit of CVG's agreements has been completed and the commission appointed for such purposes has submitted its findings to MEM.
However, MEM has not taken any action on the basis of the results, which should be made public so that the interested parties know what to expect with regard to the status of their agreements. Furthermore, the MEM should immediately submit to the President of the Republic a bill to repeal Decree No. 3,281, to give back to the Ministry the powers conferred on it by the current mining law.
At this time the participation (or, better put, the lack of participation) of MEM in the mining of gold and diamonds in Guayana has set this activity back to the state of lethargy it was in for decades before 1990, when CVG was given authority. Even with all its defects, the CVG pushed mining to a degree previously unknown. Today, unfortunately, we have returned to inertia, causing the flight of potential investors in view of the continuing lack of definition and government in this area.
For more than a decade draft mining laws have been under discussion but never have passed. If Decree No. 3,281 were repealed it would automatically empower the MEM to award gold and diamond concessions in Guayana under the current mining law, while a new law is approved. This would be a step in the right direction.
Finally, the mining development bill must be adapted to the reality of modern latin American legislations. A bill of law that contemplates international bidding contests on mining areas without sufficient technical information would not be as successful as the contests for oil zones. Likewise, the awarding of concessions by the President of the Republic in Council of Ministers is not the flexible, efficient and expeditious mechanism required to obtain mining rights in a short time. All these subjects have been satisfactorily solved in countries like Chile, Perú, Argentina and Brazil.
The National Law Center is a non-profit 501(c)(3) Research and Educational Corporation