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Venezuela will nationalize its gold industry and is moving its international reserves out of Western countries, President Hugo Chavez said on Wednesday in a combative step ahead of his re-election.
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The moves will make the finances of South America's biggest oil exporter even murkier as the 57-year-old socialist leader gears up for an election battle that was already looking close even before he was recently diagnosed with cancer.
Chavez has put large parts of Venezuela's economy under state control and is now targeting the gold industry after his government quarreled with foreign companies who complained that limits on how much gold they could export hurt their efforts to secure financing and develop projects.
Chavez seems to have lost patience and decided to put the whole industry into state hands.
"We're going to nationalize the gold and we're going to convert it, among other things, into international reserves because gold continues to increase in value," the authoritarian but charismatic president said in a phone call to state TV.
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"I'm going to approve a law to begin taking the gold areas, and there I count on (the military) because there continues to be anarchy, mafias, smuggling."
Toronto-listed Rusoro, owned by Russia's Agapov family, is the only large gold miner operating in Venezuela. It produced about 100,000 ounces of gold in Venezuela last year.
The nationalization of the gold industry fits with Chavez's broader plan to repatriate his country's bullion and shift most of its cash reserves out of Western nations to political allies including China, Russia and Brazil.
"It is a question of prudence and protection," Finance Minister Jorge Giordani said on Wednesday.
A Venezuelan official at regional body Unasur said the group was considering a similar move to repatriate part of the estimated $500 billion its members have in reserves abroad.
"It's a legitimate act, a sovereign act, unquestionable and indeed necessary," Ali Rodriguez told Venezuelan state TV.
Chavez, who has undergone two sessions of chemotherapy in Cuba since he announced in June that he had cancer, often rails against the reliance on the U.S. dollar as the global reserve currency of choice.
The move is in line with Chavez's ideological world view: during his 12 years in power he has often bashed the United States and sought to align Venezuela with emerging powers and opponents of Washington such as Iran.
Giordani said the transfers were under way, and that mounting debt worries in Europe and the United States showed that Venezuela needed to diversify where it kept its reserves.
