According to Maplecroft's principal Latin America analyst James Lockhart-Smith,Venezuela has its eye on becoming a major minerals producer,though its capacity to do so is in question.
Mr Lockhart-Smith told BNamericas that"Specifically there's recently been announcements by the Venezuelan government around developing extensively its service provision related to PDVSA and the oil sector in relation to all sorts of things that need a lot of steel,so this is going to be very important for iron ore and nickel production referring to efforts to ramp up production at state steelmaker Sidor and other basic materials companies."
He said that"The Venezuelan government is going full-speed ahead with using these companies to really try to ramp up metals production[and],obviously,associated with that,mining."
The situation is much the same with gold,he said,as evidenced by last year's repatriation of the country's gold reserves and the nationalization of the gold industry.With arbitration still pending at the World Bank's International Centre for Settlement of Investment Disputes with Toronto-based Crystallex International over the cancellation of the company's mine operating contract for the Las Cristinas gold mine,the Venezuelan government in September of this year signed the first JV agreement under the gold nationalization law with Chinese state owned Citic Group to go ahead with the joint development of the mine.
Nevertheless,and while the government's vision of being able to use and develop its resources is positive,its track record indicates that it may face difficulties.
Mr Lockhart-Smith said that"They're very aware they have natural resources.Hand in hand with resource nationalism tends to come this rather optimistic state of belief that you can develop your resources as a government adding that,despite this,in the long term what we've seen is that Venezuela typically struggles to actually make its state enterprises function effectively and you tend to see production going down and increasing inefficiencies."
