In Venezuela, artisanal miners are displaced as the Maduro government seeks more income

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In El Callao, in southern Venezuela, countless artisanal miners who once sold gold to the government have been displaced in the last year by less extraction, while President Nicolás Maduro deals with larger local miners looking for more production and income for the treasury.

Under the nationalizations of a decade ago, the formal mining sector withered and production stagnated. Now, Maduro wants to increase production through “strategic alliances” with local private companies, a dozen sources told Reuters.

These alliances are displacing informal miners in places like El Callao, added businessmen, officials and miners consulted.

“What they are looking for is to capture more gold, that is what the state has wanted,” said Alexis Chaurán, director of a miners’ association in La Ramona, another mining area in the border state of Bolívar. “As long as you’re not capturing the raw material you’re not doing anything and as long as you’re running the little miner, you’re not doing anything either.”

The government has granted permits to a dozen private companies to build some 30 processing plants, which use sophisticated equipment to process gold-bearing sands from nearby mines, the sources said. Some are already up and running.

The move came after the cash-strapped government was forced to sell existing gold reserves at the Central Bank due to falling oil production and the effects of US sanctions on crude trading .

The gold in bars fell about 60 tons in four years, according to balance sheets of the Central Bank, and the issuer has 73 tons or 4,330 million dollars in its vaults, the lowest level in 50 years.

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In this year’s budget, the government contemplated income from gold royalties equivalent to 232 million dollars, an amount 70 times higher than estimated in 2021, but well below oil revenues.

Still, many of the new plants don’t process large amounts of gold, sources say, because they rely on small-scale millers to initially process.

“The plants are monsters and many run out of material because there are few mills and few tons are processed,” said Vidal García, owner of a mill in El Callao. “Before there were fewer plants and more miners, now the material has to be divided, and production is less,” he said.

The mining development ministry and communication ministry did not respond to requests for comment, as did the state-owned Venezuelan Mining Corporation. Authorities have not disclosed the terms of the alliances or the named companies involved.

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There is no official data on how much gold is extracted from the mines in an artisanal way, nor how much is delivered by the Central Bank. According to data from the World Gold Council, in Venezuela mining production was 35 tons in 2021, most of which came from small miners who often work in dangerous conditions.

A Reuters investigation in 2019 revealed that thousands of people went to the mines to look for gold that was offered to the Central Bank, and then sent to refineries abroad in exchange for food and foreign currency.

Now the miners are being pushed aside.

Artisanal mining has been hit by limitations in access to fuel, less mineral on the surfaces, official controls, violence by illegal armed groups and failures in the supply of mercury, according to reports from non-governmental organizations and sources.

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Some private companies now occupy the spaces of displaced informal miners.

“The big companies that are in the zones did not support them (the miners) but rather evicted them,” Chaurán said while doing tests at a processing plant in La Ramona, where several miners evicted from other areas of Bolívar are.

The Mining Corporation is pressuring various miners to form alliances to guarantee small-scale mined gold, the sources added. The terms are not clear.

In the center of El Callao, dozens of stores that were dedicated only to buying gold from the mines a few years ago now sell food. “The gold doesn’t even come here,” said Diomar Pérez, a buyer from the area who in 2018 bought 200 grams of gold a day and currently buys about 10 grams.

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