The Venezuelan parliament has unanimously approved a new mining reform promoted by interim president Delcy Rodriguez, who took over the country’s leadership after the deposition of Nicolas Maduro by the United States last January. The law aims to encourage foreign, particularly U.S., investments in the mining sector through a series of legal guarantees and a more flexible tax regime.
THE ROLE OF THE UNITED STATES
The mining reform was pushed by Washington, which has already effectively taken control of Venezuela’s oil industry and seems to have set its sights on mineral deposits as well. In March, U.S. Secretary of the Interior Doug Burgum visited Caracas and met with President Rodriguez, who assured that the reform would advance “at Trump’s speed.”
WHAT THE VENEZUELAN MINING REFORM PROVIDES
The reform does not provide for a full liberalization of the mining sector, as the state will retain ownership of the resources, control over the approval of extraction projects, and the ability to impose special conditions on areas of national interest.
However, the law defines a regulatory framework more favorable to private investors: for example, it provides access to international arbitration for dispute resolution, which will no longer necessarily have to take place in Venezuelan courts. The duration of concessions has been extended from twenty to thirty years, with the possibility of extending it two more times for a total of twenty years. The tax regime has been simplified: companies will have to pay the state a concession fee of up to 13 percent of the production value, plus a new mining tax of up to 6 percent of gross revenues.
VENEZUELA’S MINERALS
Venezuela’s mining potential has not yet been fully estimated, but the country’s subsoil is believed to contain significant deposits of gold, coal, ferrous ore, bauxite (for aluminum), copper, silver, antimony and tungsten (for ammunition), titanium (for the aerospace industry), and coltan (for the electronics sector).
