Venezuela is a country of extremes. On the one side, the nation and its 31mn inhabitants are facing an economic crisis on a scale surpassing any seen in Latin America in recent years. Spiralling setbacks in 2017 have seen the country plunge toward default and hyperinflation, while the shift away from democracy under President Nicolás Maduro and rising poverty have been met with violent protests, mass emigration and US sanctions.

On the other hand stands the country's fabulous natural resources. The country boasts the world's largest oil reserves, along with rich seams of gold and other minerals, including bauxite, iron ore and coal - although quantifying these is problematic given a lack of official data.

The interplay between Venezuela's mineral wealth and politics can perhaps best be seen in the oil sector. Falling prices and mismanagement under the Chavista regime have seen oil output freefall to its current rate of below 2 million barrels per day (Mb/d), down by about 1Mb/d since 2013, according to secondary data from OPEC. The oil sector was nationalized in 1976.

Mount Roraima. Credit: Venezuela tourism ministry

The Bolivarian revolution started by former president Hugo Chávez and continued by Maduro has also not been kind on mining. Government actions culminating in nationalization in 2011 nipped a nascent private sector gold mining industry in the bud. While international players have a significant role in Venezuela's oil sector, the same cannot be said in mining.

Current legal frameworks, including the requirement that the state hold a controlling interest in new projects, coupled with a deep lack of trust in the administration, have seen miners keep their distance, while still keeping an eye out for changes in the investment climate.

Figure: Venezuela GDP 2008-2020f

Figure: Venezuelan Oil Production


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