Russian Gold Miner Rusoro Files Financial Arbitration Against Venezuela
Russian-owned gold mining company Rusoro is filling a financial arbitration claim against the Venezuelan government. CEO Andre Agapov that when Hugo Chavez nationalized the gold industry, Rusoro took a significant loss.
What Started this International Dispute?
In September of 2011, Chavez's socialist administration clamped down on gold exports, prohibiting them entirely. Venezuela also went to 55% in "join ventures" on all gold endeavors.
Rusoro, owned by the Russian Agapov family, was the biggest gold miner on the entire South American continent. It mined about 100,000 ounces of gold (a little over 6,000 pounds, or three tones) of gold in 2010.
Venezuela and the Russians Going to Government Arbitration?
Until recently, Russia and Venezuela were on extraordinarily good terms. The Slavic nation has made a great deal of money investing in Venezuela's rich oil industry--which has made plenty of money selling crude to the quickly-developing China.
Russia has also supplied military equipment to the South American state. It even agreed in 2010 to help Venezuela build its first nuclear power station, with a signed agreement to that effect.
Although Rusoro is based in Toronto, ON, Canada, it is owned by a Russian family. It remains to be seen how Chavez's actions will affect Russian-Venezuelan relations in the future.
Venezuela Thumbs its Nose at Financial Arbitration
Rusoro filed for arbitration at the International Centre for the Settlement of Investment Disputes (ICSID) at the World Bank. It did so just in the nick of time; Venezuela stated its intentions to withdraw from the ICSID early this year. The process takes 6 months, and will be completed on July 25.
The country is currently looking down the barrel of 20 ICSID cases from other angry former suiters. True to form, Venezuelan President Hugo Chavez says he will ignore any ruling by the Centre.