The company commenced the arbitration before the International Center for Settlement of Investment Disputes where Venezuela faces a dozen lawsuits for as much as $45 billion. Venezuela withdrew from the Icsid earlier in 2012, El Universal reports.
“The Venezuelan government’s actions have resulted in significant loss to the company,” Andre Agapov, the president of Rusoro, said, according to Reuters.
Rusoro operated rich deposits in southeastern Venezuela. The company’s production dropped from 4.22 tons in 2010 to 2.03 tons as a result of government obstacles. Despite high gold prices, Rusoro’s profit decreased 25.3 percent to $107.3 million in 2011.
“For several months, we have attempted to find an amicable resolution to the dispute with the Venezuelan 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,” Agapov said, according to El Universal.
Hugo Chávez, the president of Venezuela, nationalized Rusoro last year and told private firms to organize joint ventures so the state could hold a majority stake. In addition, regulations were adopted to increase royalties and ban the export of gold. While the nationalization was meant to raise Venezuela’s international reserves, the move has driven away the investors interested in the country’s huge reserves.