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Organic Law that Reserves to the State the Activities of Exploration and Exploitation of Gold

Decree No. 1,395 was published in Official Gazette No. 6,150 Extraordinary of November 18, 2014. Through said Decree, the President of the Republic issued the Decree with the Status, Value and Force of Organic Law that Reserves to the State the Activities of Exploration and Exploitation of Gold, as well as their Connected and Ancillary Activities (the “Decree-Law”). The purpose of the Decree-Law is to regulate the matters relating to the regime of gold mines and deposits, the reservation to the State of the primary, connected, and accessory activities of gold development, and the creation of companies and strategic alliances for the exercise of the regulated activities.

 

The Decree-Law indicates that the primary activities consist in the exploration and exploitation of gold mines and deposits and the secondary activities (connected and ancillary) consist in the storage, possession, beneficiation, transportation, circulation, and internal and external commercialization of gold, as long as they help exercise the primary activities. The exercise of all of these activities is reserved to the State, through (i) public institutes or State-owned companies or affiliates of the same; (ii) mixed companies in which the participation of the State or any of its public institutes or State-owned companies exceeds 55% of the corporate capital, and (iii) Strategic Alliances that the State may execute with companies permitted by the law in order for the exercise of small-scale mining, which will be coordinated and supervised by the Ministry of the Popular Power with competence over mining. The private entities that enter into Strategic Alliances with the State may carry out any activity regulated by the Decree-Law, except for commercialization of gold material.

 

Likewise, it is established that the 13% royalty corresponding to the State on account of gold extraction may be reduced to a minimum of 3% for the entities authorized by the law to exercise the regulated activities. The Decree-Law establishes that all of the gold obtained from mining activities must be obligatorily sold to the Venezuelan Central Bank (“VCB”), which will participate in, regulate, and perform transactions in the gold market in the terms and conditions established by it through the regulatory instruments issued to that end.  Also, the creation of a Social Mining Fund is established, which will have the purpose of financing the social development of the communities adjoining the areas in which the mining activities will be performed.

 

In the event that an employer of the workers of natural or legal persons that are holders of any mining right relating to gold has not migrated to the Mixed Company form, the State will guarantee to said workers the payment of their termination benefits and will seek that said workers are absorbed by a Mixed Company. In the event that any State agency or entity makes payment for the account of the employer that is bound to pay, said agency or entity will surrogate to the rights and actions of the affected worker.

 

The Decree-Law repealed Decree No. 8,683, whereby the Partial Amendment to the Decree with the Status, Value, and Force of Organic Law that Reserves to the State the Activities of Exploration and Exploitation of Gold and their Connected and Ancillary Activities, published in Official Gazette No. 6,063 Extraordinary of December 15, 2011, was issued.

 

The Decree-Law became effective upon its publication in the Official Gazette.

 

In order to access the Decree-Law, please click here.

 

“NOTE: THIS INFORMATION SHOULD NOT BE CONSTRUED AS LEGAL ADVICE ON ANY SPECIFIC MATTER AND ITS CONTENT ARE INTENDED AS A MANAGEMENT ALERT AS TO CURRENT DEVELOPMENTS IN VENEZUELA, ANY SPECIFIC LEGAL QUESTIONS REGARDING THE POSSIBLE APPLICATION OF NEW OR PROPOSED LEGISLATION TO PARTICULAR SITUATIONS SHOULD BE ADDRESSED TO TRAVIESO EVANS ARRIA RENGEL & PAZ.