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Rusoro seeks arbitration against Venezuela nationalisation

The Russian miner is the latest firm to file arbitration against Venezuela at a World Bank tribunal, saying President Hugo Chavez's takeover of the gold industry last year caused it a significant loss.

CARACAS (Reuters)  - 

Russian miner Rusoro became the latest company to file for arbitration against Venezuela at a World Bank tribunal, saying President Hugo Chavez's takeover of the gold industry last year caused it a "significant" loss.

Chavez's government already faces about 20 cases, including multibillion-dollar claims by U.S. oil companies Exxon Mobil Corp and ConocoPhillips, at the World Bank's International Center for Settlement of Investment Disputes, or ICSID.

The socialist leader, who is seeking re-election this year, said in January that he would ignore any ICSID ruling. Analysts, however, say the tribunal's 140 other member countries would still see its judgments as enforceable, meaning companies could obtain court orders to seize Venezuelan assets.

Chavez set his sights on the gold industry after quarreling with Rusoro and other foreign companies, which complained that limits on exports were hurting their efforts to secure financing and develop projects in the South American country.

In September, the government banned all exports and gave the Venezuelan state at least 55 percent of joint ventures.

Toronto-listed Rusoro, which is owned by Russia's Agapov family, had been the biggest gold miner working in the country. It produced nearly 150,000 ounces of gold in Venezuela in 2010, and about 80,000 ounces last year before the new rules took effect.

Andre Agapov, Rusoro's president and chief executive officer in Venezuela, said on Wednesday that the company had spent months seeking a friendly agreement with the government.

"But in the end, in light of the government's apparent unwillingness to look for an amicable resolution, it became the company's sole recourse to commence international arbitration," he said in a statement.

Rusoro had said that if "fair compensation" could be agreed upon, it would be happy to remain in Venezuela as 45 percent partners with the government. It had not said how much it expected to receive from the authorities in Caracas.

The company was operating the country's open pit Choco 10 mine and the high-grade underground Isidora mine, which was a 50/50 joint venture with the Chavez administration.

Venezuela is a relatively small player in the gold world, with formal mining producing about 6 tonnes in 2010. But it boasts some of Latin America's biggest deposits of the precious metal, buried below the jungles south of the Orinoco River.

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