' Social Tensions Taint Venezuelan Gold Mine Project
Fri Oct 4,12:15 PM ET
By Pascal Fletcher
LAS CLARITAS, Venezuela (Reuters) - For more than a decade, the inhabitants
of Las Claritas, a scruffy tin-roofed hamlet in Venezuela's vast, mineral-rich
Bolivar state, have been living on top of a gold mine.
But their glittering dreams of prosperity have turned into a poisonous amalgam
of anger, resentment and frustration.
Over the last 11 years, Venezuelan officials and foreign mining executives have
flown in from distant air-conditioned offices and luxury hotels to tell them that
the nearby Las Cristinas gold mine is one of the richest in the world.
They have heard endless promises of how their isolated settlement, one of a
string of mining communities carved out of dense jungle in southeastern
Venezuela, would be transformed into a thriving, modern town with abundant
jobs, modern services, and well-equipped schools and hospitals.
But ambitious projects to develop Las Cristinas, reputed to be one of the most
promising, undeveloped gold reserves in the world, failed to take off.
"We're walking on a floor of gold and we're dying of hunger," Luis Romero, a
local tradesman, told Reuters.
Las Claritas, located on the road to Brazil not far from the Guyana border,
already has the rough-and-ready feel of a mining camp. The rolling green jungle
around it is cut by chocolate-colored rivers and pock-marked by gashes of bare
orange earth, where miners, many of them illegal prospectors, have scratched
out diggings to reach the gold-rich ore.
But the district is one of the poorest in the country. The town of 15,000 people,
who come from Pemon, Caruako and Karina Indian communities, have few
services and a high crime rate, community leaders say. Ninety-five percent of
the people are unemployed.
HOPES BUOYED
"There's nothing here, no entertainment, nothing. Just drunks on the streets and
the boys trying to get into the mines to steal, nothing else. And poor people
going hungry," said Astrid Carolina, 14, an Indian youth leader.
But local hopes were buoyed again in mid-September when Canada's
Crystallex International Corp. became the latest foreign mining firm to be
awarded a contract to develop Las Cristinas by the state holding firm
Corporacion Venezolana de Guayana, or CVG.
Crystallex executives and CVG officials who recently traveled to Las Claritas
found local residents clamoring for jobs and social improvements but also
seething with suspicion.
Residents yelled "11 years of lies" and "No more broken promises!" during a
rowdy meeting organized to brief the community about the latest project and
hear their opinions. Armed National Guard troops stood by to prevent trouble.
Crystallex, a junior mining company which already operates another gold mine,
Albino, near las Claritas, signed a 20-year contract last month to develop and
operate Las Cristinas. The project will involve an estimated $500 million
investment.
Past exploration has shown proven and probable reserves of more than 11.8
million ounces of gold. Local lore says the mine was named after two beautiful
sisters, both called Cristina, who used to live in the area.
The Cristinas contract was the latest twist in a tortuous ongoing dispute
between Venezuela's CVG and another Canadian junior company,
Vancouver-based Vannessa Ventures Ltd., which is noisily claiming its rights to
the mine.
Vannessa says it bought a controlling stake in the project last year from the
previous concession holder, Placer Dome Inc. of Canada, which had initially
been awarded a development contract back in 1992. Placer pulled out in 1999,
arguing that a slump in gold prices made it uneconomical.
CVG refused to recognize the sale to Vannessa -- reportedly made for a
nominal $50. Ignoring furious protests from the jilted Canadian company,
left-wing President Hugo Chavez's government took back the Las Cristinas
mining rights for the state and authorized CVG to selected a new investment
partner.
MINING WAR
For the inhabitants of Las Claritas, this commercial and legal wrangling has
meant several years of dashed hopes and wasted opportunities. "All of them
have screwed us, Placer, Vannessa and Crystallex," said Juan Guillen, who
lives in Las Claritas.
Although there is excitement over the Crystallex contract, one vocal group is
opposed to the Canadian company.
These critics allege that several local free-lance gold miners were killed and
injured by guards employed by Crystallex at their nearby Albino gold property
several years ago. "They smashed our gold pans," said local parish councilor
Juan Tremaria.
Most Las Claritas residents dabble in part-time gold prospecting and mining,
playing cat-and-mouse with National Guard troops and security guards who try
to keep them out of foreign- or government-operated workings.
"Everyone wants to be a miner. Even the local pharmacist is a miner," said
Guillen.
Other locals told a different version of the deaths. They said the men died when
a tunnel roof collapsed on them while they were trespassing at night in the
mine.
William Saud, who arrived in Las Claritas 20 years ago as a gold prospector
and runs a local business, said that Crystallex also failed to make good on its
promises to create many jobs and build a new school. "Experience has shown
us they do not deliver," Saud said.
LONG-TERM COMMITMENT
Confronting these accusations, Crystallex officials went out of their way to
reassure local inhabitants that their project would bring real, tangible benefits to
Las Claritas.
Acknowledging the "great expectations" of the community, Luis Felipe Cottin,
president of Crystallex's Venezuelan operation, pledged the company had a
long term commitment to the area and would work to start the mine as soon as
possible.
"We want to be here for decades. ... I am sure that we will not disappoint you,"
he said. The audience responded with applause but also some heckling.
Crystallex agreed to make an up-front payment of $15 million to acquire the
existing Las Claritas mine camp -- a huddle of whitewashed prefabricated huts
and warehouses on a swathe of red earth -- and technical data on the deposit.
Cottin said Crystallex estimated it would take 18 months to build the actual
mine. He saw the project reaching its maximum processing capacity -- 40,000
tons a day of gold-bearing ore -- in nine years from the date of the contract.
Part of the contract reads more like a social development plan then a mining
blueprint. Under a clause euphemistically named "Special Advantages,"
Crystallex commits itself to initially creating 100 new jobs over this year and
next.
It is also required to take over the financing and running of the local medical
center, build 30 local homes, construct a water treatment and supply system
and improve local roads.
Cottin said the construction phase of the mine could generate between 2,000
and 3,000 jobs, while the working mine itself would employ some 900 people.
But this seems a far cry from the needs of the community, where 95 out of
every 100 available workers are out of work. "This is a mineral-rich zone where
there should be a large number of jobs," said Nelson Bolivar, a labor leader.
"Whether they're good or bad, what we want is a company that gets the project
started," Indian community representative Oscar Manzano told Reuters. '
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