Russia gold mining firm sues Venezuela at World Bank

Russian-Canadian mining firm Rusoro is joining 20 other companies in seeking compensation from Venezuela through World Bank arbitration, after the Latin American country nationalized its gold mine.

Venezuela’s actions “provoked significant losses for the business and its shareholders,” declared Andre Papov, Rusoro president and CEO, in a statement seen on the company’s website Wednesday.

Rusoro said the nationalization of its gold mine in Bolivar state violated the investment agreement between Canada and Venezuela.

The company added that arbitration was its “sole remedy” after the “apparent unwillingness” of the Venezuelan government to find an amicable solution to the dispute.

Twenty other foreign firms, including US oil giants ExxonMobil and ConocoPhillips, are already suing Venezuela in the World Bank court for nationalizing their assets.

The multi-billion dollar lawsuits prompted Venezuela’s leftist firebrand President Hugo Chavez to announce he would pull his country out of the tribunal, a decision expected to become effective next week, though the pending cases would continue.

Last August, Chavez signed a law granting his state at least 55 percent of joint ventures in the gold mining industry, in order “to reinforce national independence, economic independence,” he said at the time.

He also said the move was aimed at preventing “mafias” from exploiting Venezuela’s natural resources. Wildcat mining makes up 60 percent of local production in the gold sector.

The new law also stipulated that the state would set the royalty rate at 13 percent of the value of the gold extracted by the big mining companies.

Venezuela has the 15th largest gold reserves in the world, with an estimated 365.8 tons, according to the World Gold Council.