Why has Venezuela Opened its Mining up to Private Investors?

Venezuela has approved a mining law, which will encourage investments from private and foreign entities.

In an attempt to stabilise the country's economy, the new law will repeal mining regulations from 1999 and 2015.

This will modernise its mining industry, enabling more excavation of Venezuela's gold and critical minerals.

A new mining law

Venezuela is opening its vast mineral and oil reserves to private investment, following the passing of a new law. The law was approved unanimously by the government-controlled National Assembly, in an attempt to liberalise its economy following the US arrest of its leader Nicolás Maduro earlier this year.

The country is welcoming investors to unlock value from its wealth of resources, replacing a long-standing legal framework that previously restricted the private sector's role in mining. In January, a hydrocarbons law was passed, reforming its previous Organic Hydrocarbons Law to allow private sector participation in the oil and gas industry.

This reduces state control over the industry, allowing private gorms to directly engage in exploration and production, with less regulatory pressure. Acting President of Venezuela, Delcy Rodríguez, is working to align with the US and develop diplomatic ties with US President Donald Trump. 

Following the raid in January, the US has loosened restrictions in Venezuela, encouraging the country to welcome outside capital in order to boost its economy once more. Venezuela hosts the world's largest oil reserves, but it also has significant deposits of gold and critical minerals, which includes coltan – used to produce tantalum, which is used in smartphones, automotive electronics and laptops – and bauxite – the world's main source of aluminium. 

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Venezuela-US relations

The country does not currently have any industrial-scale mining of its resources but the new law will welcome investments and action from outside companies. The new law will welcome domestic, foreign, state-owned and private companies to exploit the materials found within Venezuela's resources, with concessions permitted for up to 30 years. 

The legislation creates a more simplified tax scheme, which includes royalties of up to 13% of the gross production value of the mineral and a 6% tax on gross revenue from companies carrying out mining activities. 

"I'm feeling very optimistic about an environment where investment is going to flow not just to offshore oil and gas, not just to Caucus, but actually to the interior where these enormous resources exist," explained US Interior Secretary Doug Burgum in March, after a meeting with President Rodríguez. 

"The people of Venezuela have been resourceful in trying to protect their own resources from the hyperinflation that's occurred. But I think the faster that we can move on normalising relations, the faster you're going to see the gap between the official and the unofficial currency rate close. 

"We saw at the ministerial that was held at the State Department with Marco Rubio a few weeks ago, 51 countries coming to Washington DC wanting to sign agreements where nations could trade freely with the price floor around critical minerals, the resources that are here around not precious metals like gold, but critical minerals in this country and minerals that you need like boxite for aluminum for defense and for advanced manufacturing and for your laptop.

"And if people don't understand critical minerals, just understand that every phone and every camera that you're pointing at me right now has got rare earth minerals in it. It's not just for defense and for computers. Everybody needs to have a secure supply of these to keep the global economy going. The United States is committed to leading in that area.

"And again, Venezuela as a trusted ally and partner of the United States, could play a huge role in that."

An industry responsibility

Though this could mean a more stable economy for Venezuela and a more developed mining supply chain, critics of the bill have their doubts. Those opposed worry that the new amendments create more opacity within operations, preventing citizens from having insights into what is occurring around them.  A significant portion of Venezuela's mining takes place in a 11.2-million-hectare stretch of rainforest, named the Orinoco Mining Arc. 

The main mineral reserves in Venezuela sit across the south, extending over Bolivar and Amazonas. 

In 2024, it was estimated that 9,531 hectares were deforested due to mining activity, according to Amazon Conservation’s Monitoring of the Andes Amazon Program. Though the proposed law describes a commitment to 'ecological mining development', environmental groups criticise this as a form of greenwashing. 

The legislation does include steps for assessing environmental impact and consultation with Indigenous communities, but there is no requirement for this to occur before operations begin or contracts are signed. 

For this law to take place responsibly, it needs to ensure transparency and careful operations in order to minimise its impact. Though it could position Venezuela as a strategic player in oil and minerals supply chains, investors should consider their impact and how they interact with the surrounding environment.