Zeev's Turnips Patch-No Politics (ZEEV)

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*** Venezuela to complete mining review by year-end (GRZ/HL) ***


Venezuela to complete mining review by year-end

Thu Dec 1, 2005 09:19 AM ET

CARACAS, Venezuela, Dec 1 (Reuters) - Venezuelan authorities will complete a review of mining contracts and concessions by year-end and new policies for the sector will go into effect on Jan. 1, Mining and Basic Industries Minister Victor Alvarez said on Thursday.

Venezuela, the world's No. 5 oil exporter, is carrying out a broad inspection of gold and diamond mining deals to weed out idle operations and hand them to small-scale mining cooperatives financed by the state.

"The new mining policy goes into effect on Jan. 1, 2006, and all the work we are accelerating right now is to have the announcement ready for the end of the year," Alvarez said before a meeting between Venezuelan and Iranian industrial ministers.

"It will be a year-end message ... We will talk about the review we carried out on the concessions, the review we did on the contracts and all the decisions we have taken with respect to them," he said.

President Hugo Chavez, a former soldier who has promised to bring a socialist revolution to Venezuela, says many energy and mining contracts signed before his 1998 election are "robbing" the nation of its resources by giving preferential terms to foreign companies.

Alvarez said a decree published early this year in the official gazette naming several gold mining concessions the state had decided to hand to mining cooperatives was a mistake that should not have been printed.

Some foreign companies working in Venezuela's mineral-rich Bolivar state have been waiting eagerly for news of the review, after markets fretted over what the government had planned for the sector.

Among major foreign companies mining in Venezuela are Crystallex (KRY.TO: Quote, Profile, Research) of Canada, Hecla Mining Co. (HL.N: Quote, Profile, Research) of the United States and Shandong Gold-Mining Co. Ltd. (600547.SS: Quote, Profile, Research) of China.

Crystallex shares touched a 2-1/2-month high on Wednesday as investor hopes rose that Venezuela will soon unveil the results of the review and allow the Canadian company to start working at its Las Cristinas gold mine.

Crystallex has been seeking an environmental permit so it can start developing Las Cristinas, which is touted as one of the world's biggest gold deposits.

The government has said it will give no new concessions to international firms and is developing a state gold and diamond company, modeled after state oil firm PDVSA, that will oversee the sector and work as a partner with private investors.

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh69641_2005-12-01_14-19-29_n01...