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Editorial Commentary
VenEconomy:
“ Loma de Níquel” destroyed
A constant of the Chávez administration has been its systematic dismantling of foreign investments, particularly those from the United States or the United Kingdom, in most cases breaching contracts and violating laws and treaties. Examples go from Vanessa Ventures (Minera Las Cristinas) to the oil service contractors and strategic alliances in the Orinoco Oil Belt (now turned into "mixed enterprises” controlled by the State) to the electricity companies and the telephone company, CANTV, which were passed over to the hands of the State in 2007.
Now it is the turn of Minera Loma de Níquel, the largest mining company in the country located near Tejerías and the Central Region Freeway.
Its shareholders include the British company Anglo American PLC (with 91.4%), the Mezerhane/Banco Federal Group (6%), and the International Finance Corporation (IFC, the investment arm of the World Bank with 2.7%), who invested more than $400 million to develop the mine. The company has reserves of some 40 million mt of nickel.
Minera Loma de Níquel was opened in March 2001 by President Chávez, who, on that occasion, described it as one of the projects that would have most impact on and provide a vital boost for the country’s economic and social development.
In just seven years, Minera Loma de Níquel has come to be considered one of the most successful ore processing plants in Latin America, having obtained ISO operational and environmental quality certifications. It exports nickel to the United States and Europe, accounts for more than 2% of global nickel supply, and has estimated annual sales of $450-500 million.
Yet, despite its impeccable track record, despite its having demonstrated a high degree of social responsibility, abided by current laws and regulations, and been a major provider of productive jobs in the area, the government has had no better idea than to revoke the concession alleging labor and environmental irregularities that have no legal grounds whatsoever.
Once again, the government is resorting to “legal” stratagems to expropriate the assets of a foreign company. Once again, it is taking control of a property when there are no prospects that this will bring any benefits for the company, as has happened in the cases of the appropriation of the oil companies, the CANTV and Elecar, to mention just a few. The fact of the matter is that the VenezuelanState does not have the capacity to maintain companies of this type operational and efficient and that the confiscatory measures only serve to scare off private investment, both foreign and domestic, and to deprive the country of the only means of creating production, jobs, and well-being for the population.
The only hope that Minera Loma de Níquel has of not ending up in the cemetery of companies being run by the government is for the in-coming Minister for Basic Industries and Mining Rodolfo, Eduardo Sanz, to reverse the measure to revoke the concession.
VenEconomy is a Venezuela's leading specialized publisher in the economic and financial area. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.
This commentary was originally published by VenEconomy, on 01/10/2007. Petroleumworld reprint this article in the interest of our readers. Petroleumworld does not necessarily share these views.
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Petroleumworld News 01/11/08
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