File photo of illegal miners digging in the earth in search of gold in a makeshift camp for illegal mining near Tumeremo in Venezuela's southern Bolivar state in this July 15, 2010 file photo.Carlos Garcia Rawlins/Reuters
The death of Venezuelan strongman Hugo Chavez has the mining world abuzz, but few expect open doors to his country's vast mineral wealth any time soon.
In his 14 years at the helm of the Latin American country, Mr. Chavez evicted foreign investors in areas ranging from the massive oil industry to mining, farming and heavy industry.
Few Canadian miners can forget Las Cristinas, the gold deposit he secured from the grasp of Crystallex International Corp. in 2011, the year he moved to nationalize Venezuela's gold industry.
Now, the world's miners are trying to figure out just what the death of Mr. Chavez means for them. Most agree the Andean country hosts the kind of mineralization that attracted global miners to Colombia after it resolved security issues relating to rebel activities and the drug trade.
"If Venezuela opens up, it will be one of the top exploration areas in the world," said Ioannis Tsitos, a mining veteran with extensive experience in Latin America. "It has huge potential," said the chief executive officer of Vancouver-based Eagle Mountain Gold Corp. who previously spent most of his career with BHP Billiton Ltd., the world's largest miner.
The country has large deposits of gold, coal and iron ore, among other minerals.
Mr. Chavez, who died on Tuesday after a two-year bout with cancer, was a fiery populist who ruled Venezuela from 1999, also nationalizing banking and tourism assets as he hardened an anti-U.S. stance.
Vice-President Nicolas Maduro will run Venezuela for the interim and be the governing socialists' candidate in an election to be called within 30 days.
Stuart Bergman, assistant chief economist at Export Development Canada, said a win by Mr. Maduro could mean volatility – such as more expropriations and anti-U.S. rhetoric – as the new leader seeks to consolidate power.
Foreign investment in the resource sector, in mining and in oil reserves that are the largest of any member of the Organization of Petroleum Exporting Countries could become a key issue during the elections. Mr. Maduro will probably face Henrique Capriles, the opposition leader who lost to Mr. Chavez in an October election.
"Nationalism simply is not working for them – just like it doesn't work for anyone else," said Steve Letwin, chief executive of Iamgold Corp., who is a veteran operator in Latin America. "Venezuela is rich in natural resources and will need to eventually incent foreign investors to return in order to improve current economic conditions."
The famed Las Cristinas property, where former Canadian gold giant Placer Dome invested millions before abandoning the deposit amid low gold prices, will now be developed by a Chinese state investment company. It had proven reserves of 17 million ounces when gold was worth $550 an ounce, or about a third where it is today.
"If Maduro wins the presidential election in 30 days, it is likely to mean more of the same, albeit without Chavez's charisma," said Peter Leon, head of the Africa mining and projects practice at Webber Wentzel, a Johannesburg law firm. "Having said that, Chavez's death may well mean a much less nationalistic approach to the resources governance in the Andean region."
A Venezuelan miner who spoke on condition of anonymity said he expected a period of unrest in his country even after elections as political factions sort out complicated power struggles.
"I see Venezuela softening its resource stance after that," he said.
With files from reporter Tavia Grant.