President Hugo Chavez has signed a decree formalizing the nationalization of Venezuela's gold mining industry.
The move Tuesday is aimed at giving the government total control over gold produced in the South American country.
Chavezhas not offered details on how the new decree differs from a 1965 lawthat nationalized gold mining. But he suggested on Tuesday the measurewould give authorities increased powers to evict wildcat miners fromillegal mines.
Chavez also announced the repatriation of US$11billion in Venezuelan gold reserves currently held in U.S. and Europeanbanks would begin within several weeks.
John Ing, president andchief executive of investment firm Maison Placements Canada, said evenbefore the talk of a move to nationalize the gold industry in Venezuela,gold companies had been wary of Chavez.
"There was very much a reluctance by anybody to do anything," he said.
Ingsaid Venezuela had seen a gold rush before Chavez came to power, butthat ended long ago and the companies have long since packed up and leftthe South American country.
The nationalization move dragged down the shares of at least one Canadian-traded gold producer.
Vancouver-basedRusoro Mining Ltd. (TSXV:RML), one of the few publicly traded goldminers active in Venezuela, dropped two cents to 12 cents, a decline of14.3 per cent. About 236,000 shares traded hands on the TSX VentureExchange.
Earlier this year, Rusoro said it expects to produce98,000 ounces of finished gold from its open pit Choco mine and itshalf-interest in the Isadora underground mine in Venezuela that is ajoint venture with the government.
Last week, Rusoro said it has had no indication from the government "of any changes to the company's operations."
Rusoroalso said it believes the gold sector crackdown is meant to stopwidespread illegal mining operations and smuggling within the remotesoutheastern region of the country.
"We believe the government'sannouncement is targeted toward the many illegal mining operations inBolivar state that operate without government permits and continue tocause significant environmental damage," Rusoro president and CEO AndreAgapov said in a statement last Thursday.
He added that informal mining operations destroy forests and pollute rivers with mercury.
"Goldproduced by these illegal operations is often smuggled out of thecountry or sold illegally, and the government is now taking action."
— With files from The Canadian Press