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MKT&IND REPORTS |
 Rusoro Mining plans to file for international arbitration against the government of Venezuela early in the third quarter of 2012 following the nationalization of the company’s gold mining assets in the country.
The government of Venezuela took full control of Rusoro’s assets by expropriating the company’s concessions, mines, staff, operations, and assets on March 14.
Initially, the government intended to enter into a joint operating agreement with Rusoro, forming a mixed interest enterprise for the further exploitation of gold assets in Venezuela, and planned to provide compensation to Rusoro for its loss of ownership.
Rusoro began talks to form a joint venture with state oil company Petroleos de Venezuela SA and transfer 55% of its gold assets to the government in August 2011 after President Hugo Chavez nationalized the industry in an attempt to curtail what he said were illegal activities from “mafias”.
Rusoro officials met with Venezuela’s Oil and Mining Minister Rafael Ramirez shortly after the gold nationalization law was passed and promised to fairly compensate the company.
“The government is ignoring us at the moment. They have already made us an offer which we fully refused as it was insufficient. They haven’t bothered to improve it,” Matias Herrero, the company’s CFO, said.
“We are still open to sitting down with Venezuela to reach an agreement, but it looks like we are not a priority for the Venezuelan government at the moment,” he added.
“Our sole recourse is to file for arbitration under the Additional Facility Rules of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) against the government of Venezuela alleging violations to the provisions of the bilateral treaty for the protection of investments between the governments of Canada and Venezuela,” he said.
He commented that a request for arbitration cannot be filed by the company before June 15 as the treaty requires the parties to resolve the dispute through amicable negotiations within six months from the date when one party notifies the other of the dispute and requests the other to begin negotiations,.The company delivered its notification to the Venezuelan government on December 15, 2011.
Among other things, the treaty provides that Venezuela must pay a fair and timely compensation to the company as a result of the nationalization. Venezuelan President Hugo Chavez said in January that Venezuela would not accept the ICSID’s rulings.
Rusoro would be the fifth mining company seeking compensation from Venezuela through the World Bank’s arbitration court following a nationalization attempt.
Those who have filed claims against the Venezuelan government include Crystallex Mining, which already filed a U.S. $3.4 billion claim regarding its Las Cristinas investment. The company’s final hearing is scheduled now for November 2013.
The company’s operating assets included the Las Christinas, Tomi, and La Victoria mines in Venezuela, all of which the government seized as part of its nationalization drive. Richard Marshall, the company’s investor relations’ head, said that the company has no current operations in Venezuela at this time or elsewhere. “The focus continues to be the successful prosecution of the ICSID case”, he said.
Marshall said that the company remains positive about the situation, saying that one of the recent ICSID cases underway (Williams Companies vs. Venezuela) was settled just a couple of weeks ago.
Gold Reserve filed for arbitration in late 2009, after Venezuelan authorities seized its Brisas project, while Canada’s Vanessa Ventures filed a similar claim in 2004 for Las Cristinas. Rusoro, with gold reserves amounting to 5.6 million ounces, operated the Choco 10 mine and the Isidora mine in southeastern Venezuela.
Venezuela officially produces 11 tonnes of gold a year. Illegal miners extract an additional 10 to 11 tonnes a year, Chavez said in May.
The ICSID has since 2006 overseen about 20 cases since Venezuela began nationalizing assets in strategic industries including oil, mining, cement and telecommunications.
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28.05.2012 22:34
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