The writing has been on the wall for years, as Anglo American has been writing down the value of its sole remaining Venezuelan asset.
As they said in their 2011 financials, “The accelerated depreciation charge at Loma de Níquel has arisen due to ongoing uncertainty over the renewal of three concessions that expire in 2012 and over the restoration of 13 concessions that have been cancelled.”
Imaginary scenario 1: Chávez government makes a big show of the handover of control, citing it as another logro de la revolución, with lots of men in fatigues and rhetoric about how this is the first step in fulfilling his 6-year program with its insistence on increasing control of the mining sector. President announces a JV with Belarus to produce mining dump trucks or something. That would fulfill goal 1.2.6, “Asegurar los medios para el control efectivo de las actividades conexas y estratégicas asociadas a la cadena industrial de explotación de los recursos mineros.”
Imaginary scenario 2: Venezuelan government doesn’t entirely know it’s about to get a mine, and on handover day finds itself with a plant and staff and no environmental permit. It has to turn off the ovens, which start to cool very slowly and within weeks start to suffer damage. Months later, as they continue to cool, workers block the Panamericana highway where the exit to the plant starts, demanding that they be allowed to work again. Nickel prices bump up a wee bit as almost 100 tons a day — 2% of world output — stays offline. This would help fulfill Chávez’s goal number 1.2.9, “Crear la capacidad para influir en la valorización de los precios de los minerales,” although perhaps not in the way he had intended.
Main thing is the Venezuelan state will get control over some nickel. Some of that might end up in coins, some of which may fall on the floor of the Metro de Caracas and do something delightful.
Happy Friday people, I’m off to watch Colombians celebrate football.