Venezuelas CVG to halt iron and aluminum exports
The Minister of Basic Industries and Mining announced that Corporación Venezolana de Guayana (CVG) will not be renewing its contracts for the international supply of iron and aluminum when they expire this year and in 2006.
Starting January 2007, iron and aluminum currently being exported under existing supply agreements will remain in-country so Venezuelan companies can manufacture more higher value-added products.
The government expects that by August 2006, Venezuelan manufacturers will be processing at least 50 percent of countrys total aluminum
production.
The expectations are optimistic.
Production in 2004 totaled 623500 metric tons of aluminum, of which 423600 mt were exported and only one third (207810 mt) was processed in domestically.
Iron ore production totaled 21.5 million mt in 2004, with exports accounting for 9.3 mmt. The remaining 11.4 mmt were processed locally for direct reduced iron and steel products.
While the Ministers plan will bring about new jobs, foreign exchange, and tax revenue, some Venezuelans worry that the country does not have the installed capacity for domestic
consumption to replace exports in a mere 18 months.
Some also feel that halting exports will prove detrimental to Venezuelan development.
The Minister of Basic Industries and Mining believes the decision will be ultimately beneficial to
Venezuela and is part of its global development strategy.