Venezuela Pushes Out Small Gold Miners As Maduro Seeks More Revenue

In Venezuela's El Callao mining region, countless small, artisanal miners that once sold gold to the government have left the area in the last year because accessible local supplies are depleted and President Nicolas Maduro has been striking deals with bigger miners, seeking more production and more revenue for the treasury.

Nationalizations in 2011 pushed out private miners and gold production stagnated. Now, Maduro wants to ramp up production by building "strategic alliances" with select private companies, a dozen sources told Reuters. These partnerships are forcing out informal miners in places like El Callao, in the country's south, businessmen, government officials and miners said.

"They are looking to have more gold. It is what the state has (always) wanted," said Alexis Chauran, director of an association of gold millers in La Ramona in eastern Venezuela, near the Brazilian border.

The government has granted 12 private companies permissions to build 30 processing plants, which use sophisticated equipment to extract gold-bearing sand from nearby mines, sources said. Most are already up and running.

The move came after the cash-strapped government was forced to sell off some of its existing central bank gold reserves while crude exports were squeezed by U.S. sanctions and Venezuela's oil production dropped.

The bank's gold bar reserves have fallen by 60 tonnes in four years. Reserves, equivalent to 73 tonnes or $4.33 billion, are at their lowest in five decades, according to data on the bank's website.

The latest government budget estimated income from gold royalties this year equivalent to $232 million, 70 times higher than 2021 gold projections yet far behind oil revenues.

Still, many of the new plants are failing to process serious quantities of gold, according to several sources, because they depend on initial processing by small-scale millers.

"The plants are monsters and many run out of material because there are few millers and only a few tonnes are processed," said Vidal Garcia, owner of a mine in El Callao. "Before there were fewer plants and more miners."

The mining and communications ministries and the state-owned Mining Corporation did not respond to requests for comment.

Authorities have not disclosed terms of the alliances or named companies involved.

'FORCED OUT'

There is no official government data, but the World Gold Council estimated Venezuela's 2021 gold mining production stood at just 35 tonnes. Most of this was from small "wildcat" miners, who often labor in dangerous conditions.

Maduro's government bought gold from artisanal miners for years, selling it to allies for food and hard currency, a 2019 Reuters investigation revealed.

Now they are being pushed aside.

In the past year, artisanal miners have been hit by a dearth of fuel and shortages of mercury used to extract gold, but which NGOs have linked to contaminated water supplies and environmental damage. Many have also accused government officials of extortion and complained of violence by illegal armed groups, according to sources and NGOs involved in the mines. Also, the most accessible supplies of above-ground gold have been depleted.

"Surface gold is running out in some areas," one industry source said.

Some informal miners have been displaced by of private companies.

Chauran said several miners have already arrived in his area after being displaced from other parts of Bolivar state.

Elsewhere, some have said the state mining corporation is pressuring some miners to work with the government's partners, though contractual terms are unclear.

Diomar Perez, a gold trader in El Callao, said he used to buy 200 grams a day from artisanal miners. Now he buys just 10 grams.

"Gold doesn't reach these parts anymore."