June 25, 2009 / 3:15 AM / 10 years ago

UPDATE 2-Venezuela seeks loan to develop diamond, gold mining

(Recasts with Venezuela seeking loans for mining)

MARACAY, Venezuela, June 24 (Reuters) - Venezuela is seeking a loan to help develop its gold and diamond mining sector, to be partially paid with the mineral output of the projects, President Hugo Chavez said on Wednesday.

Chavez, a Cuba ally who is trying to build a socialist revolution, has increased state control over mining, oil and other sectors of the economy, forcing some investors into joint ventures with a government majority.

“We are on the verge of adquiring a credit with several institutions and countries to invest in the exploitation of gold, diamonds and precious metals. And we will pay a part of this credit with that production,” Chavez said at a summit of a left-wing trade alliance he leads.

He did not specify the ammount of financing being sought or other details of the loan.

OPEC-member Venezuela has created a joint-venture with Russian-Canadian mining junior Rusoro (RML.V) to develop several mining ventures.

Venezuela’s government also said Wednesday it will not renew mining concessions after they expire as part of efforts to move the sector toward joint ventures and operations contracts.

“We have halted the policy of concessions, we are moving toward joint ventures and eventually to operating contracts,” Mining Minister Rodolfo Sanz said at the start of a regional summit of Venezuela’s leftist allies.

Last month Venezuela ended two concessions held by U.S.-based miner Gold Reserve GRZ.TO in one of Latin America’s largest gold deposits.

Chavez has steadily nationalized large parts of Venezuela’s economy. Some investors have been paid what experts estimate is a fair price for their assets, but the takeover of heavy oil operations run by U.S. oil companies sparked legal disputes. (Reporting by Fabian Cambero and Enrique Andres Pretel; writing by Frank Jack Daniel; Editing by Michael Urquhart)

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