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In an effort to halt unregulated mining and increase reserves, Hugo Chavez announced Wednesday he will nationalize Venezuela’s gold industry.The news came promptly after the Venezuelan president’s announcement that he would be re-distributing the countries cash reserves to Russia, China, and Brazil while bringing worldwide gold reserves home to national banks.
The Financial Times estimates two-thirds of Venezuela’s reserves are held in $364 tons of gold worth $18 billion.
Venezuelan lawmaker Julio Montoya told the FT the it’s believed China, Russia, and Brazil have required the gold transfer to secure sizable loans to Venezuela made in recent years.
Venezuela holds one of the greatest gold deposits in the world, but its mines have been dug by illegal miners and smugglers, who according to Chavez extract 10 to 11 tons a year.
The nationalizing of the mines will not affect the Russian company Rusoro and will increase damages sought by other, ousted mine companies like Canada’s Gold Reserve which increased its claim from $1.9 to $2.1 billion.