Marc Lubaszka has been mining in Venezuela for more than 5 years and he is now adding equipment that will allow him to recover diamonds in a more efficient way.
In the past, his teams have been able to procure uncut diamonds in the midst of targeted gold mining operations. Now, they are looking to focus on diamond excavation and exportation.
There are plenty of reasons why the team could sell the diamonds in Venezuela. After all, it is easier but the deterrent is profitability or the lack there of. An uncut diamond can be sold 80% higher on the open market in other countries. They are bringing in equipment for excavation.
Gold Prices are largely determined, in part, by what is happening with gold mining production companies.
In an attempt to make the industry more efficient, many gold producers are beginning to rely on advancements in technology that are coming from outside of the industry.
Virtual Reality and augmented reality viewing technologies combined with the internet, cloud technology, real time analytics, and algorymithic components are allowing operations to become more efficient by supplying management with realtime numbers and stats on worker productivity.
Guyana underground mining has been widely criticized for having poor working conditions, poor methods of waste disposal, improper choice of working tools, and poor planning on site architecture and engineering due to laxed regulations.
Some see this as an opportunity. As the government will be introducing legislature later this year in an attempt to increase regulations to protect the workers, investors now see a chance to invest in small scale mining.
If the expense of a small scale mining operator increases they can continue to operate at a lower net margin or they can seek outside capital to help offset the expense but more importantly increase production.
When Marc Lubaszka arrived in Venezuela he knew the country was rich in gold, diamonds, and oil. Getting to the gold, he knew, would present a challenge. Getting the gold out, would be the easy part.
Risk vs. Reward
The problem with mining gold in Venezuela is that you can purchase gold from miners for less than half of the global market price when you are in remote areas. The more populated areas that are controlled by organized crime set a market price that is somewhere below 35% of the global market price. As a gold miner, you are required to sell the gold you realize at a fixed price. Failure to comply can result in physical harm or even death at the hands of the regulators.
There are over 23, 450 square miles of land available throughout the Orinoco Mining Arc. This land is rich in gold, diamonds, copper, and other resources. Most of the gold miners in the area are made up of two or three men teams with limited mining capacity due to the lack of sophisticated equipment.
Many miners engage in backbreaking labor that results in .6 to 1 gram of gold per day. The upper 5% of gold miners in the region operate professional equipment, employ skilled labor, and have access to food, medicine, energy and clean water. These miners can produce between 200 to 1,200 grams of gold daily for those interested in mining gold in Venezuela.
Organized Crime Syndicate
The country has a group that governs itself going back decades. The area where gold is produced in the state of Bolivar has had gold miners that have been able to operate without government interference. There have been instances where the government in Venezuela has attempted to interfere in mining operations but those that govern the area have been able to retain control.
There are very few rules. The law dictates that people involved in gold mining cannot steal from others, they must buy and sell at the syndicate’s determined price, and miners are required to pay a tax to the syndicate to operate in the region.
The gold and diamond business in Venezuela is an easy business to enter into and a difficult business to get out of. Once you are in the business you are immediately surrounded by threats. The threat of disease, territorial disputes, equipment failure, poverty, violence, and the lack of rules and regulations to abide by.
Disputes are not handled through arbitration or the court system. There are people with guns, and then there is everyone else. Those that hold influence outside of the mining territory are never allowed to exert their power within a mining camp.
How to Win in Venezuela
The formula is simple. Get equipment that is illegal to have and transport it past the military check points that you will find throughout the country and into the mining camps. You have to pay the syndicate a fee to enter and you have to pay a percentage of the gold you mine to the syndicate once you are operational. You have to get food and fuel which are both black market items into the mining camps so you can operate the machines and the men you employ.
Pull the gold out of the ground. Once you have the gold, you have to get the gold out of the region so that you can sell it at the world market price.
* There is a list of things that can go wrong. This list is not given to you when you begin.