Mining has downsized 60 percent since 2009

Venezuelan mining is not free from the shortening behavior reported elsewhere in the productive activity. Based on the numbers provided by the Central Bank of Venezuela （BCV）, mining has edged 60 percent over the past couple of years.

In view of the president of Venezuela's Mining Chamber （Camiven）, Luis Rojas Machado, many factors play a role in such performance. The salient one is "an inexistent mining policy in the country; lack of information and dialogue."

Local mining "lowered 60 percent of its Gross Domestic Product （GDP） in 2009-2010." Particularly, "it fell down 39 percent in 2009 and in 2010 the drop is at 12 percent."

In Venezuela "there is no mining policy in place; if any, it is unknown, to such an extent that there are not numbers for the sector, only those from the BCV in its quarterly reports" related to the domestic economy as a whole. In those records "sinking 60 percent is noted in the mining GDP in the past two years. We are talking about iron, aluminum, coal, bauxite, metallic and non-metallic. That is serious."

In his opinion, "mining has been stricken." Discouragement comes from "the exchange policy, the reform of local mining laws, accrued divestiture, pullout of key parties, lack of policies and, particularly, nationalizations."

The executive officer thinks that mining "requires imported input （machinery and equipment） in order to produce. This accounts for 60-70 percent of mining costs. A sector like gold （…） is producing at a loss; that is, the growth of the gold product price is below the growth of the mineral costs."

From January, following the unification of the exchange rate, dollars for import went from USD 2.60/VEB to USD 4.30/VEB. "This has a very important impact" on production. According to Rojas Machado, "the necessary foreign currency to keep production at a proper level is not been generated."

In addition, he commented on nationalized cement makers which are facing now a "sagging production." Also, the government has had to "import ore, aluminum, bauxite, and even ballast to make railroads. From being exporters we ended up importing."

Conditioned breath of air

No matter the shrinking, Rojas Machado hopes that the trend could be reversed in 2011. "A numerical growth is expected, but it does not necessarily mean that positive numbers will be recorded."

In his opinion, the sector "has lowered to such an extent that even the smallest investment should be noted." Such a favorable balance "will depend on the government action, its investments and meeting of the goals of construction of houses. This will trigger cement, belaying pins, iron, aluminum, metallurgy. It also depends on renewal of the mining industrial park."

Notwithstanding this specific fact, Rojas Machado thinks that government agencies should "set and implement a mining policy and be open to dialogue, because that is enough with the law and regulations in force.