U.S. Administration Eyes Venezuela’s Critical Minerals
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Following its major oil deal in Venezuela, the Trump Administration is now pursuing the country's gold and critical minerals wealth as a way to reduce U.S. dependence on Chinese-processed metals. However, unreliable geological surveys and underdeveloped infrastructure pose significant obstacles to rapid resource extraction.
After signing what President Donald Trump touted as “the biggest oil deal in world history” to take majority control of 65 billion barrels of proven crude oil reserves in Venezuela, the U.S. Administration is setting its sights on the South American country’s potentially vast gold and critical minerals wealth.
The Trump Administration is weighing measures to involve U.S. companies in Venezuela’s gold and critical minerals and has held initial meetings with firms to see if there is interest in engaging in the Venezuelan mining sector, sources with knowledge of the plans told Reuters this week.
Securing gold and critical minerals from Venezuela could help the U.S. with its supply of metals crucial for defense technology and applications that don’t depend on China. Moreover, greater access for U.S. and Western firms in Venezuela’s minerals sector would further undermine Chinese and Russian influence in the country, which the ousted Venezuelan leader, Nicolas Maduro, deposed and arrested by the U.S. in January, had enjoyed.
“We are all watching the oil situation closely and recognize there could be a parallel track with critical minerals,” an executive from a critical minerals firm who met with the U.S. Administration about Venezuela, told Reuters.
However, the path to mining Venezuela’s minerals would not be as straightforward as it arguably is for the oil reserves. Operators generally know how much crude oil Venezuela has (the biggest reserves in the world), but no one really knows the reserves and mining potential of the gold and critical minerals deposits. Related: Ukraine Targets Russia's Key Black Sea Oil Port
This would delay any future development, even if the Trump Administration spins a potential critical minerals deal in Venezuela as a major win for America’s supply.
Venezuela’s mining industry has been in an even more decrepit state than the oil industry in the later years of Maduro’s rule, with little production and strict government control over reserves.
Since Maduro was captured early this year, Venezuela has passed reforms to open the industry to international companies, while the U.S. Treasury’s Office of Foreign Assets Control (OFAC) has moved to authorize some transactions with gold and critical minerals from Venezuela and permitted negotiations of potential investment deals.
The challenge in Venezuela’s mining is to assess how much is the resource potential as geological surveys under Maduro’s Venezuela are unreliable, to say the least.
Infrastructure and legal frameworks are also underdeveloped for international firms to jump into the mining sector in Venezuela.
The South American country has gold, bauxite, nickel, copper, and coltan, according to various geological data.
Gold production is limited and there is no industrial-scale mining for bauxite, which is used to make aluminum, and coltan.
“Despite repeated declarations of mineral abundance, Venezuela never built the institutional capacity, industrial base, or investment environment required to translate resources in the ground into sustained production at scale,” Gracelin Baskaran, Director of the Critical Minerals Security Program at the Washington-based Center for Strategic and International Studies (CSIS), said days after Maduro was arrested.
According to GlobalData Energy, Venezuela’s mineral wealth potential has yet to be quantified, and it would take years to see critical minerals from Venezuela potentially helping to reduce America’s dependence on China-made and China-processed metals for the defense industry.
Geological surveys are limited, so any investor would like to know with more reliability and accuracy what’s in Venezuela’s ground, apart from oil, that is.
The development of a mineral supply chain to process raw materials would also take years, GlobalData Energy said in January.
“Developing a critical mineral supply requires surveys, permits, mine development, processing facilities and logistics – components that are largely underdeveloped in Venezuela,” GlobalData’s analysts said.
“Lastly, even if such infrastructure were to be built, project timelines would arguably extend beyond those relevant for US supply chain diversification,” they noted.
By Tsvetana Paraskova for Oilprice.com
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The Trump Administration is weighing measures to involve U.S. companies in Venezuela’s gold and critical minerals and has held initial meetings with firms to see if there is interest in engaging in the Venezuelan mining sector, sources with knowledge of the plans told Reuters this week.
Securing gold and critical minerals from Venezuela could help the U.S. with its supply of metals crucial for defense technology and applications that don’t depend on China. Moreover, greater access for U.S. and Western firms in Venezuela’s minerals sector would further undermine Chinese and Russian influence in the country, which the ousted Venezuelan leader, Nicolas Maduro, deposed and arrested by the U.S. in January, had enjoyed.
“We are all watching the oil situation closely and recognize there could be a parallel track with critical minerals,” an executive from a critical minerals firm who met with the U.S. Administration about Venezuela, told Reuters.
However, the path to mining Venezuela’s minerals would not be as straightforward as it arguably is for the oil reserves. Operators generally know how much crude oil Venezuela has (the biggest reserves in the world), but no one really knows the reserves and mining potential of the gold and critical minerals deposits. Related: Ukraine Targets Russia's Key Black Sea Oil Port
This would delay any future development, even if the Trump Administration spins a potential critical minerals deal in Venezuela as a major win for America’s supply.
Venezuela’s mining industry has been in an even more decrepit state than the oil industry in the later years of Maduro’s rule, with little production and strict government control over reserves.
Since Maduro was captured early this year, Venezuela has passed reforms to open the industry to international companies, while the U.S. Treasury’s Office of Foreign Assets Control (OFAC) has moved to authorize some transactions with gold and critical minerals from Venezuela and permitted negotiations of potential investment deals.
The challenge in Venezuela’s mining is to assess how much is the resource potential as geological surveys under Maduro’s Venezuela are unreliable, to say the least.
Infrastructure and legal frameworks are also underdeveloped for international firms to jump into the mining sector in Venezuela.
The South American country has gold, bauxite, nickel, copper, and coltan, according to various geological data.
Gold production is limited and there is no industrial-scale mining for bauxite, which is used to make aluminum, and coltan.
“Despite repeated declarations of mineral abundance, Venezuela never built the institutional capacity, industrial base, or investment environment required to translate resources in the ground into sustained production at scale,” Gracelin Baskaran, Director of the Critical Minerals Security Program at the Washington-based Center for Strategic and International Studies (CSIS), said days after Maduro was arrested.
According to GlobalData Energy, Venezuela’s mineral wealth potential has yet to be quantified, and it would take years to see critical minerals from Venezuela potentially helping to reduce America’s dependence on China-made and China-processed metals for the defense industry.
Geological surveys are limited, so any investor would like to know with more reliability and accuracy what’s in Venezuela’s ground, apart from oil, that is.
The development of a mineral supply chain to process raw materials would also take years, GlobalData Energy said in January.
“Developing a critical mineral supply requires surveys, permits, mine development, processing facilities and logistics – components that are largely underdeveloped in Venezuela,” GlobalData’s analysts said.
“Lastly, even if such infrastructure were to be built, project timelines would arguably extend beyond those relevant for US supply chain diversification,” they noted.
By Tsvetana Paraskova for Oilprice.com
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