What has happened with the Orinoco Mining Arch Project?

By Dorixa Monsale and Anaís López for CER Latinoamericana

Here we present a chronology of the announcements, decrees and most relevant facts, between 2014 and 2017, which created legal, political and economic conditions leading to the enactment of the Orinoco Mining Arch decree and the execution of the project.

precedents OF THE DECREE (2014-2016)

2014

March 20, 2014.
A decree is enacted creating the Presidential Commission for the Protection, Development and Integral Promotion of the Legal Mining Activity, in the Guayana region [1].

September 3, 2014.
A fusion of the Environment, Housing and Habitat Ministries takes place (MPP for Housing, Habitat and Eco socialism – MPPVHE). The Environment Ministry disappears, turning into a Vice-Ministry [2]. Organizations denounce a 40-year recoil on environmental issues.

November 18, 2014.
A decree with rank, value and force of law is enacted on the Integral Regionalization for the Socio-productive Development of the Homeland [3]. It contemplates the creation of Special Economic Zones in the national territory by the Executive power.

April 16, 2014.
Gold Reserve announced on Monday that it gave banks in Luxembourg embargo orders linked to the payment of 700 million USD on Venezuelan interest bonds and funds, as part of their campaign to obtain compensations after the arbitration dispute [4].

September 22, 2014.
CIADI fails in favour of Gold Reserve mining company. Venezuela will have to pay 740,3MM$ while the company claimed 2,3MMM [5]. The president of the Canadian mining company, Doug Belanger, expressed: “We still have hope that Venezuela will fulfil its obligations with the company. Venezuela has a history of fulfilling its international obligations, and possesses foreign exchange reserves for 20MMM$”.

2015

April 8, 2015.
MPPVHE is eliminated and the government re-establishes the Ministry for Housing and Habitat and the Ministry of Environment is adjoined to the new Ministry for Eco-Socialism and Water through the Vice-Ministry for the Eco-Socialist Management of the Environment [6].

August 7, 2015.
A meeting with high ranking government officials is held with the managers of Gold Reserve to agree on the terms of the 740 million debt payment from CIADI [7].

December 30, 2015.
A decree with rank, value and force of law is enacted to create the Organic Law that reserves for the state the right to carry out exploration and exploitation activities linked to gold and other strategic minerals [8].

2016

February 10, 2016.
The state anonymous military company for mining, oil and gas industry is created (CAMIMPEG) adjoined to the Ministry of Defence. Its goal is to carry out all the economic activities linked to the exploration, exploitation, processing and commercialization of the existing resources in the subsoil of the country, among other things [9].

February 24, 2016.
Decree Nº 2248, Official Bulletin Nº 40855. Creation of the “National Strategic Development Zone of the Orinoco Mining Belt”. This decree is framed within the Law for Integral Regionalization for the Socio-productive Development of the Homeland. This National Strategic Development Zone of the Orinoco Mining Arch has a surface of 111,843.70 km² [10]. During the event of the decree’s enactment, president Nicolás Maduro invited 150 national and multinational companies to sign memorandums for the exploration, certification and exploitation of mineral resources that exist in this vast area located in the states of Bolívar, Delta Amacuro and Amazonas, next to the Orinoco river.

March 8, 2016.
Massacre of Tumeremo, which led to the disappearance and assassination of 28 miners in the Sifontes municipality in the Bolívar state. With this event the public opinion learns about the delicate situation of crimes against humanity and human rights violation taking place in the South-West of the region. Moreover, a national debate starts regarding traffic gangs, smuggling, crime, deforestation and environmental pollution, criminal bands and political sectors involved to small scale gold activity.

August 5, 2016.
Decree 2412, forbidding the use, possession, storage and transport of mercury (HG) as a method to obtain or treat gold and any other mineral metallic or non-metallic resource, in all the phases of the mining activity developed in Venezuela [11].

August 5, 2016.
Decree 2413, declaring Niobio (Nb) and Tantalio (Ta) as strategic elements for the exploration and exploitation, therefore they are now subject to the regime foreseen in the Decree with rank, value and force of law that reserves for the state the right to carry out exploration and exploitation activities linked to gold and other strategic minerals [12].

August 22, 2016.
CIADI ruled in favour of Rusoro Mining, a Russian-Canadian company, claiming Venezuela must pay 1.2 millardos (?) USD, as a compensation for the expropriation done by the government in 2011 [13].

August 26, 2016.
The Executive announces the incorporation and/or entailment of the following companies to the Orinoco Mining Arch project: Gold Reserve, Barrick Gold International Corporation Pais o Estado, MPE International, China CAMC Engineering Co, Bedeschi, Afridiam DWC LLC, Energold Mineral, Glencore AG, Guaniamo Ming Faoz Mining, C.A., Camimpeg, Ecomine, Hidrocal y Supracal. With some of these contracts were signed to formalize the constitution of the mixed companies and with others memorandums of understanding were signed.

September 30, 2016.
Decree Nº 2465, authorizing the creation of a state company composed of Venezuelan Mining Corporation S.A. and GR Mining (Barbados) Inc., which will be called “Eco-Socialist Mixed Company Mining Sowing, S.A.” [14]. Afterwards, on the 2nd of November 2016 Resolution Nº 000030 was approved (Official Bulletin Nº 41022), delimiting the geographical area for the Eco-Socialist Mixed Company Mining Sowing, S.A.

November 8, 2016.
The national government officialised the creation of three mixed companies for the exploration and exploitation of coltan. Through decrees Nº 2.538, 2.539 and 2.540, published in the Official Bulletin Nº 41026, the mixed companies are formalised composed of the Venezuelan Mining Corporation (CVM) and the following companies: Energold Minerals Inc., Faoz Corporation C.A. and Supracal C.A. [15].

November 28, 2016.
The government incorporates 38 Socialist Mining Brigades from El Callao, Bolívar state, to the national productive model of mining development. It approves 39 work permits for the Mining Brigades of Nacupay and the creation of alliances with small miners [16].

2017

January 9, 2017.
Resolutions, published in the Official Bulletin 41070, authorize the Socialist Mining Companies and Brigades to carry out gold-related and benefit activities, as a product of small-scale mining in the area established for this activity, called Nacupay. Through other resolutions the areas where the Socialist Mining Brigades can carry out gold exploration were determined, in the surfaces located in the jurisdiction of El Callao municipality, Bolívar state [17].

January 19, 2017.
Decree N° 2.683. The Executive signs the first agreement for the constitution of a mixed mining company between the Bolivarian Republic of Venezuela and the Faoz Corporation for the exploitation of coltan (called blue gold), a highly valued mineral in the electronic, military and aerospace industries. The Faoz Corporation, C.A. is a company with no experience in mining and was formally constituted in July 29, 2016, just 7 days before the Venezuelan government announced its entry into the Mining Belt project.

March 27, 2017.
By means of Decree No. 2788 (Official Gazette No. 41.122), the Eco-socialist Mixed Company Siembra Minera, S.A., is granted the right to directly develop the activities set forth in Article 1 of the Decree with rank, value and force of law that reserves the activities of exploration and exploitation of gold and other strategic minerals for the state; as well as the activities contemplated in Article 1 of the Mining Law.

March 27, 2017.
Diamond, copper, and silver are declared strategic elements for exploration and exploitation through decrees No. 2781, No. 2782 and No. 2783, respectively. [18]

July 11, 2017.
Gold Reserve announces the first advances in the Brisas-Cristinas project, based on meetings held with representatives of the National Government. The announcements include: advances in obtaining permits for excavation, the exploitation of saprolite as a new activity in the project, and the payment of 29.5 million dollars to the Canadian mining company. [19]

September 9, 2017.
The President of Minera Ecosocialista Parguaza S.A., César Sanguinetti, announces the production of the first ton of coltan. The company projects the production of 20 tons of coltan per month [20].

December 5, 2017.
Decree 3.189 is signed. It grants the Venezuelan Mining Corporation (CVM) the power and the right to develop, directly or through a mixed national or foreign company, the whole process of investment and exploitation of gold and other minerals from the southern zone of Venezuela. Published in Gazette 41.294 [21]. The following issue of the Gazette established the geographical coordinates in which the CVM will carry out its mining activities.

December 5, 2017
The Minister of Ecological Mining Development, Víctor Hugo Cano, announced that a total of 6.5 tons of gold had been extracted during 2017 from the Orinoco Mining Arch Development Zone and that they were placed in the vaults of the Central Bank of Venezuela (BCV). [22]

December 5, 2017.
President Nicolás Maduro urged (small scale) miners to generate revenues of $ 2,000 million by 2018. It is estimated that more than 40 tons of gold would be needed to reach that amount [23].

December 26, 2017.
The National Constituent Assembly, presided exclusively by deputies of the PSUV (governing party), approved the “Constitutional Law of the Tax Regime for the Sovereign Development of the Mining Arch”. This will include the Orinoco Oil Belt, according to statements from the first vice-president of the ANC, Aristóbulo Istúriz [24].

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Front image: Chávez in a TV transmission in 2011, uses a black marker to illustrate the extension of the Orinoco Oil Belt and marks in red the Orinoco Mining Arch.

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Notes

1. Decreto N° 841. Gaceta Oficial Nº 40.376. March 20, 2014. Caracas, Venezuela. Http://virtual.urbe.edu/gacetas/40376.pdf
2. “Venezuela retrocede 40 años en materia ambiental con fusión ministerial”. EL UNIVERSAL. September 4, 2014. http://www.eluniversal.com/vida/140904/venezuela-retrocede-40-anos-en-ma-
   teria-ambiental-con-fusion-ministeria
3. Gaceta Oficial Extraordinaria N° 6.151. Decreto 1.425. November 18, 2014.
   http://zonaseconomicasespeciales.mppp.gob.ve/fichas/GACETALeydeRegionalizaci%C3%B3nIntegralparaelDesarrolloSocioproductivo.pdf
4. “Gold Reserve tiene en la mira activos de Venezuela en el extranjero para conseguir su indemnización”. Alexandra Ullmer para REUTERS-LTA. April 16, 2015. https://lta.reuters.com/article/businessNews/idLTAKBN0N805Q20150417
5. “Gold Reserve awarded $740 million in Venezuelan mine dispute”. JUDITH SPITZER, Journal of Bussiness. September 25, 2014. https://www.spokanejournal.com/local-news/gold-reserve-awarded-740m/
6. Decreto 1.701. Gaceta Oficial N° 40.634. April 8, 2015. Caracas,
   Venezuela. http://www.finanzasdigital.com/wp-content/uploads/2015/04/Gaceta40634-ministerios-habitat-ecosocialismo.pdf
7. “Gold Reserve Reports on Recent Meeting with Venezuelan Government Officials”. SPOKANE, BUSINESS WIRE. August 7 2015. https://globalrubbermarkets.com/35216/gold-reserve-reports-on-recent-meeting-with-venezuelan-government-officials.html
8. Decreto N° 2.165. Gaceta Oficial Nº 6.210, December 30, 2015. Caracas, Venezuela. http://www.bod.com.ve/media/97487/GACETA-OFICIAL-EXTRAORDINARIA-6210.pdf
9. Decreto N° 2.231. Gaceta Oficial Nº 40.845, February 10, 2016. https://app.box.com/s/bnx6oq4bmhr6cxfeflzcuvov1sj5phzl
10. Decreto N° 2.248. Gaceta Oficial Nº 40.855, February 24, 2016. http://www.mindefensa.gob.ve/UGEFANB/wp-content/uploads/2017/08/Gaceta-Oficial-40.855-del-24FEB2016-Reduccion-30.pdf
11. Decreto N° 2.412. Gaceta Oficial Nº 40.960, August 5, 2016.
    http://finanzasdigital.com/wp-content/uploads/2016/08/Gaceta40960ProhibicionMercurio.pdf
12. Decreto N° 2.413. Gaceta Oficial Nº 40.960, August 5, 2016.
    http://finanzasdigital.com/wp-content/uploads/2016/08/Gaceta40960ProhibicionMercurio.pdf
13. “Ciadi ordenó a Venezuela pagar $ 1,2 millardos a la firma Rusoro”. EL NACIONAL. August 24, 2016.
    http://www.el-nacional.com/noticias/economia/ciadi-ordeno-venezuela-pagar-millardos-firma-rusoro_19638
14. Decreto 2465. Gaceta Oficial N° 41.000, September 30, 2016.
    http://www.finanzasdigital.com/wp-content/uploads/2016/10/Gaceta-Oficial-41000-Balance-BCV.pdf
15. “Oficializan creación de tres empresas mixtas para explotar coltán en Bolívar”. María Ramirez Cabello, CORREODEL CARONÍ. November 11, 2016.
    http://www.correodelcaroni.com/index.php/economia/item/51410-oficializan-creacion-de-tres-empresas-mixtas-para-explotar-coltan-en-bolivar
16. “Gobierno Bolivariano incorporó 39 Brigadas Mineras Socialistas al nuevo modelo productivo nacional”.
    Prensa Mppdme. November 28, 2016
    http://desarrollominero.gob.ve/2016/gobierno-bolivariano-incorporo-39-brigadas-mineras-socialistas-al-nuevo-modelo-productivo-nacional/
17. Resoluciones del Ministerio de Poder popular de Desarrollo Minero Ecológico. Gaceta Oficial N 41.070, January 9, 2017.
    http://www.finanzasdigital.com/wp-content/uploads/2017/01/Gaceta-41070-Remuneraciones-Obreros-APN.pdf
18. Decretos Nº 2781, Nº 2782 y Nº 2783. Gaceta Oficial N°
    41.122, March 22, 2017.
    http://www.ghm.com.ve/wp-content/uploads/2017/03/41122.pdf
19. GOLD RESERVE PROVEE ACTUALIZACIÓN DE VENEZUELA (NR-17-08). July 11, 2017
    https://www.otcmarkets.com/stock/GDRZF/news/Gold-Reserve-Provides-Venezuela-Update–NR-17-08-?id=164227&b=y
20. “Empresa mixta Parguaza produce primera tonelada de coltán en Bolívar”. Por Agencia Venezolana de Noticias (AVN). September 9, 2017.
    https://www.aporrea.org/economia/n314279.html
21. “Firmado Decreto que transfiere a Corporación Venezolana de Minería todo el proceso de inversión y explotación de oro y demás minerales”. Venezolana de Televisión (VTV). December 5, 2017.
    http://vtv.gob.ve/firmado-decreto-que-transfiere-a-corporacion-venezolana-de-mineria-todo-el-proceso-de-inversion-y-explotacion-de-oro-y-demas-minerales/
22. BCV recibió este martes 558,47 kilogramos de oro. December 6, 2017.
    http://camcomercione.org/9738-bcv-recibio-este-martes-558-47-kilogramos-de-oro–
23. “Maduro exige producir en 2018 tanto oro como China en 4 años”. Ahiana Figueroa, EL ESTIMULO. December 19, 2017. http://elestimulo.com/elinteres/maduro-exige-producir-en-2018-tanto-
    oro-como-china-en-4-anos/
24. “ANC aprobó Ley de régimen Tributario Especial sobre el Desarrollo del Arco Minero”. Thiany Rodríguez, PANORAMA. http://www.panorama.com.ve/contenidos/2017/12/27/noticia_0041.html