Thousands of miners staged a violent two-week demonstration last September in Las Claritas, Venezuela, close to the Brazilian border. They blocked the border highway, burned trucks and threw rocks and Molotov cocktails at national-guard troops. Their main target was Crystallex, a Toronto-based company that since 2002 is said to have held the legal rights to Las Cristinas--the world's fifth largest gold mine, with 12.5 million oz. of proven reserves.
Another confrontation between a ruthless First World corporation and exploited Third World labor? No, this is the Venezuela of President Hugo Chávez, where any semblance of business as usual is usually unintentional. The miners, who are illegal squatters, were protesting because they say Crystallex is trying to bar them from doing their free-lance work at Las Cristinas--despite the fact that Crystallex has yet to begin operating the mine and, as a result, has failed to create the 1,500 formal, well-paying mining jobs (more than $200 a month, with benefits) that had been promised. Crystallex points out that it can't open the mine--and thereby offer the legitimate jobs--because the company has yet to receive the government permits to operate it.
So in the meantime, the mine continues to be worked by thousands of illegal miners such as Henri González. Laboring under a sweltering sun, he blasts a water cannon against clay to loosen any tiny gold-bearing nuggets. He then extracts the gold with mercury, which sticks to gold like glue. "Sometimes I spend 15 days at a time in here without finding anything," he says. Like most of his fellow miners, González, 29, typically earns only enough to afford a shack made of zinc sheets and tree branches, set in a seedy mining camp where kids play in mercury-contaminated water.
The miners' demonstration was fueled in large part by Chávez's increasingly popular antiglobalist agenda, which he recently put on display at a protest rally in Mar del Plata, Argentina, against President George W. Bush, who was there to push free trade. In another speech, in September, Chávez warned that in order to "recover the national power and sovereignty of our resources," Venezuela "will not give any more mining concessions to transnationals," and it may even revoke some. The day after that broadside, Crystallex's share price on the Toronto Stock Exchange plummeted 40%, to $1.50. Shares of other firms mining gold in Venezuela, like Idaho-based Hecla, also took hits--especially when Chávez promised to create a competing, state-owned company that would employ the illegal miners. Jonathan Goodman, CEO of Toronto-based mining firm Dundee Precious Metals, told Bloomberg News, "Chávez scares the crap out of me."
Goodman isn't alone. Chávez is determined to curtail U.S. and foreign influence in Latin America. He has panicked already bug-eyed energy markets this year by raising taxes and royalties on Venezuelan oil piped by what he calls scofflaw foreign oil firms, including U.S. giants like ExxonMobil. He's insisting that they convert their drilling contracts into joint ventures that give the government a majority stake.