Topics CoveredWelcome to VenezuelaOverview of ResourcesMetalsFossil FuelsInvestmentSources
Welcome to Venezuela
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Venezuela is located in northern South America and borders the North Atlantic Ocean and the Caribbean Sea, between Guyana and Colombia. It covers an area of 912,050 km2 and its total population is 28,047,938, according to 2012 estimates. The climatic conditions vary from tropical to humid, and are moderate in the highlands.
|The national flag of Venezuela.|
Image Credit: CIA factbook
Venezuela is awash with natural resources such as diamonds, bauxite, gold, iron ore, natural gas and petroleum. The GDP of the country is $378.9 billion as of 2011. The country largely depends on oil revenues, which accounts for about 95% of the export value and around 12% of the country’s GDP value. After a major economic slowdown in the period of 2009 to 2010, the country regained its economic status with an increase in GDP growth rate by 4.2% in 2011.
Overview of Resources
Venezuela has rich resources of gold, nickel, iron ore, steel, diamond, alumina, coal, bauxite, asphalt, natural gas, and petroleum.
The Map of Venezuela. Image Credit: CIA factbook
The major mineral resources produced in the country are:
- Bauxite, accounting for nearly 1.2% of global production.
- Aluminum, 1.1% of global production.
- Nickel, 1.0% of global production.
The country’s mineral exports in 2010 amounted to $65.8 billion, of which petroleum exports amounted to $62.3 billion and iron ore, cement, steel, aluminum, bauxite and other products amounted to $3.5 billion.
According to 2011 reports, about 11 metric tons (Mt) of gold was produced by Venezuela. The country has 365.8 Mt of gold reserves, which makes it the world’s 15th largest gold producer according to a report by the World Gold Council published in August 2011. Gold reserves in the country account for nearly 61% of the country’s total mineral reserves.
The Las Cristinas mine of Venezuela has gold reserves of 27 million ounces. In 2009, the mine was estimated to have 464.4 million Mt of gold.
Paso Diablo coal mine of Venezuela produces 7.5 million metric tons per year (Mt/yr) of pulverized coal injection (PCI) coal. The Guasare coal basin has allowed the Carbones del Guasare company to access nearly 175 Mt of coal reserves. Mina Norte coal mine is another mine in the country which has considerable amount of coal.
Mount Roraima. Image Credit: CIA factbook
The 5.1 trillion m3 natural gas reserves in Venezuela are the second largest in the Western Hemisphere. In 2010, the total daily production of natural gas in the country was averaged to be 3.3 million m3. The total amount of natural gas produced in the country in 2010 was 29,500 million m3. Barrancas and Yucal Placer Blocks are the major projects executed in the natural gas mining sector.
In 2010, the Ministerio del Poder Popular para la Energía y Petróleo estimated crude oil refining capacity of the country to be 1.28 Mbbl/d. The country’s crude oil production in 2010 amounted to nearly 986 million 42-gallon barrels. The major refineries of crude oil in the country include:
- Paraguana refining center with total capacity of 940,000 bbl/d
- Puerto de la Cruz refinery, total capacity of 195,000 bbl/d
- El Palito refinery, total capacity of 127,000 bbl/d.
Nearly 50,000 t of uranium reserves were found in the States of Amazonas and Bolivar.
Venezuela’s economy is mainly based on its supply of petroleum products and hence it was greatly affected by sudden fall in oil prices during the global recession. The Venezuelan government has implemented tax incentives for small and large companies that had invested in the country’s mining sector, in an attempt to boost the economy.
Despite having abundant resources like gold, aluminum and petroleum, the country’s mining industry is still underdeveloped. Few Australian companies play a vital role in the mining industry of Venezuela. Excel Mining and RFC Finance Corporation are the companies involved in two mining projects in the country. However, the government has nationalized many industries that have major control over the country’s natural resources. The government has invested about US$5.81 billion to develop its mining industry. It has also approved US$159 million for the workers in the country's heavy industries that extract and manufacture gold, bauxite, iron and other mineral resources.
The country’s large reserves of crude petroleum are more likely to attract investment from countries like Russia, Italy, Iran and China in the future, despite its uncertain economic condition and nationalization initiatives. In addition, PDVSA’s plans for exploration and production of natural resources could ensure development of Orinoco hydrocarbon resources. Also, the plans for building new crude oil refineries could encourage the country’s strategic alliances with other strong economies. In addition, the development of Las Cristinas is expected to generate huge revenues. Thanks to all these ambitious development plans, Venezuela's mining sector will likely improve in future and contribute more to the country's economy.
Disclaimer: The Author of this article does not imply any investment recommendation and some content is speculative in nature. The Author is not affiliated in any way with any companies mentioned and all statistical information is publically available.