Americas

Venezuela

The Saga That Is Las Cristinas

Venezuelan President Hugo Chávez speaks during the broadcast of his weekly program "Alo, Presidente" Sept. 25. (Photo: STR / AFP-Getty Images)

Las Cristinas, in southeastern Venezuela, is one of Latin America's biggest gold deposits. Often the subject of grandiose plans, it has for years remained a largely untapped resource. Today, the mine at Las Cristinas is supposedly owned and operated by a Canadian company, Crystallex International Corporation, which obtained a mining concession from the Venezuelan government in 2002. I say "supposedly" because the story of Las Cristinas has long been one of legal wrangling, bureaucratic delays and speculative shenanigans. So much so that it is still unclear who actually owns the mine. Venezuela's president, Hugo Chávez, reasserted his country's right to control its own oil and mineral wealth last year. To him, it seems a simple idea: Las Cristinas belongs to Venezuela. But it was an idea that caused panic in the boardrooms of North American mining companies.

Although feasibility and environmental impact assessments have been completed, extraction of gold at the site has been delayed by two key ministries, which are withholding the final permits. Meanwhile, millions of dollars of earth moving equipment at the mine rusts inactive in the searing sun. To compound it all, small "illegal" artisan miners, or "garimpiros," have invaded the site from neighboring Guyana, and even from as far away as northern Brazil.

In September, small miners and local residents, exasperated by the ongoing delays and successive legal battles, clashed with Crystallex but were later pushed back by government troops. In an effort to placate locals, media reports mentioned that Crystallex has promised local miners and residents in Santo Domingo and Nuevas Claritas access to drinkable water, paved roads and an expanded medical center. Crystallex also has promised to bring 1,600 jobs to the area.

The untapped mine's wealth was first parceled off as mining concessions in 1963. In 1964, the concession titles for Las Cristinas 4, 5, 6 and 7 were issued to Ms. Dot Culver-Lemon, an American, for a 25-year period. Her husband it seems assisted the pilot Jimmy Angel, another American, in his "discovery" of the world's highest waterfall, Angel Falls, not far from Las Cristinas.

Mrs. Culver-Lemon was quick to get help and advice on what to do with the property and entered into a series of contracts and lease agreements promising great riches to her through the exploitation of the mining concessions. The dispossessed widow surrounded herself with unscrupulous profiteers made up of local experts and lawyers, a dependency that would deprive her of any meaningful income from the concessions and eventually cost her the mining title itself.

A synopsis unladed with legal terminology goes like this: The first lawsuit in the Las Cristinas ownership saga was filed in Venezuela in 1982, when Mrs. Culver-Lemon sued a business partner for breach of contract. In 1984, the case went to a regional state court. Then another suit followed. Then the widow's lawyer at the time sued her for unpaid legal fees incurred during the case. As Mrs. Culver-Lemon was unable to pay those fees, her attorney filed a claim in the same court for the unpaid fees and effectively became her creditor. Subsequently Mrs. Culver-Lemon found a new lawyer to help her fight to gain definitive ownership to her portion of the Las Cristinas concessions. Her first lawyer, to whom she owed $259,000 Venezuelan bolivars, and who filed the first lawsuit on her behalf, lent the same amount owed to him by Mrs. Culver-Lemon to a local miner by the name of Ramon Torres, for reasons that remain unclear. Then in an unexpected twist, Mrs. Culver-Lemon's second lawyer — apparently acting with her full consent — sold her concessions to the same miner, Ramon Torres. In another transaction, Torres then relinquished the titles to the company Inversora Mael C.A., without notifying any state mining officials, as was customary.

In 1985, a battle-weary Mrs. Culver-Lemon reattempted to regain her ownership rights to the mine. A year later, however, the potentially wealthy widow died without any inheritors. Her death set off a decade-long saga of complex machinations and legal actions designed to gain control of Las Cristinas.

In 1989, after the original 25-year title granted to Mrs. Culver-Lemon ran out, the last legal holder of the title to the mine, Mael, lost all rights to its claim. A bewildering succession of lengthy legal battles ensued, as each new investor, whether an individual or a foreign company, had to contend with the fall out from previous rounds of legal wrangling. Through it all, production at Las Cristinas languished.

Then, as if to save the day, the Canadian mining giant Placer Dome Inc. entered into its first "joint venture" with a state-owned mining administrative entity known as the CVG (Corporación Venezolana de Guayana) in 1991. The result of this unlikely union was a partnership called Minera Las Cristinas C.A., known as Minca, Placer Dome held a 70 percent stake in the mine; the Venezuelan government, 30 percent.

Then Crystallex sued Minca, claming title to part of the mine, which lead once more a halt in operations at the mine in early 1998. Later a court ruling dismissed the legal action and ruled in favor of Minca. But is was a hollow victory; low gold prices made the mine an unprofitable investment and once again operation was suspended.

In 1999, Placer, having declined to put the project into production after nearly a decade of legal battles over ownership of the mine, sold its stake to fellow Canadian mining company Vannessa Ventures Ltd. for $50. Selling concessions for one of the world's largest gold mine deposits for such a ridiculous sum rightly enraged the Venezuelan authorities and the government then proceeded to file criminal charges against Placer. Furthermore, in retaliation to Placer's $50 bail out, a presidential decree expropriated Las Cristinas. The National Guard seized control of the property. The CVG was given the authority to determine the fate of the property. Immediate afterwards, the CVG cancelled Vanessa's rights to develop the property.

In 2002, the president of the CVG awarded the Las Cristinas concession to Crystallex. Vannessa sought redress first in front of the high court of Venezuela and then, when it realized that the fight had stirred up sentiment against foreign companies exploiting the nation's natural resources, in front of the International Center for Settlement of Investment Disputes (I.C.S.I.D.), a Washington-based organization backed by the World Bank.

The escalation of the dispute drew unwanted attention to the issue and created diplomatic friction between the Canadian government, which assisted Vannessa in sponsoring the compensation claim in front of the World Bank tribunal, and the Venezuelan government. Fearing retribution from the World Bank, which could withhold millions of dollars worth of loans, the Venezuelan high court decided in extremis to examine Vanessa's claim for compensation. But the claim remains unresolved. A plan to put the mind into production once and for all seems hopelessly elusive. Several more related lawsuits have been filed, and been delayed. An end to the 16-year legal battle has failed to materialize and it remains unclear to this day who really owns the mine and who will inevitably gain access to its riches. As for the promises to local residents by Crystallex, they, too, have failed to materialize.

The saga continues.

View the Worldpress Desk’s profile for Michael Werbowski.

Advertise with Worldpress.org