Yesterday, a World Bank arbitration panel ruled that Venezuela has to pay a cool one billion, three hundred and eighty six million dollars to Crystallex, the Canadian mining firm whose rights to develop the massive Las Cristinas mine in Bolivar state were rendered worthless by a Chávez expropriation decree back in 2008.
The award piles yet more bad news onto a state hardly able to afford the bad news it already has.
Last month, another Canadian mining co., by the name of Gold Reserve, scored a similar-if-smaller win for its loss of the nearby Las Brisas mine. The government managed to jiu-jitsu those bad news into good news by cutting a deal with Gold Reserve that gave them rights to the very same mine they’d just won a panel for losing the rights to.
Venezuela could end up paying not one but two separate billion dollar + awards…for the same mine!
So can’t they just do the same thing again? Promise Crystallex to hand them their old mine back in return for a cash injection? Nope, because the one way the government managed to turn a Las Brisas liability into an asset was by loading handing Gold Reserve rights to Las Cristinas. Like a ñapa.
How exactly Las Cristinas was still in the government’s gift beats the hell out of me.
Listen, it’s not easy to keep up with this stuff unless you make it a full-time obsession – and trust me, some people do – but the last I’d heard the government had sold off rights to Las Cristinas to CITIC, the giant Chinese conglomerate in 2012. CITIC, by my count, thus became the tenth concessionary to Las Cristinas since the mine was first awarded to an outside contractor, which happened way back in the 1960s. By my count, that makes Gold Reserve the eleventh company to be awarded this mine — which has never actually gone into production.
Amazingly, the Crystallex award isn’t even the only arbitration case stemming from Las Cristinas. A couple of concessions ago – it really is hard to keep track of all of them – Las Cristinas was awarded to Rusoro, a Canadian-based, Russian-owned gold mining firm, and just as quickly expropriated from them. In 2012, Rusoro also went to ICSID, the World Bank arbitration panel, to seek restitution. That case is still winding itself through the ICSID bureaucracy, which is anything but speedy. Long story short, Venezuela could end up paying not one but two separate billion dollar + awards…for the same mine!
And, come to think of it, how long can it be before CITIC notices its own concession’s been snatched away as part of that Gold Reserve and files another complaint over the mine?
There’s an undeniable air of farce around the whole, six-decade saga of Las Cristinas. Geologically, the place is, well, a gold mine, with 16.9 million ounces waiting to be brought out. That’s almost $20 billion at current prices. 11 concessions and an enormous pile of litigation later, the mine has still never produced a single ounce of gold. At least not legally.
It’s like the place is cursed, I’m telling you. Which, considering it’s all just down the road from Tumeremo, might not be such a bad guess.
Caracas Chronicles is 100% reader-supported.
We’ve been able to hang on for 19 years in one of the craziest media landscapes in the world. Now, the difficulty level was raised abruptly with the global pandemic. We’ve seen different media outlets in Venezuela (and abroad) cutting personnel to avoid closing shop. This is something we’re looking to avoid at all costs, and it seems we will. But your collaboration goes a long way in helping us weather the storm.Donate