The Daily Journal.— The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued three new general licenses on Wednesday that expand authorized operations in Venezuela’s coal, gold and other mineral sectors, opening the door to trade, technology supplies and negotiations for future investments.
The measures, identified as General Licenses 51D, 54C and 55A, replace previous authorizations and establish a new framework for U.S. companies to participate in activities related to Venezuela’s mineral resources.
The regulatory package allows companies to move forward with commercializing Venezuelan minerals, supplying goods and services for extractive operations, and negotiating new investment contracts. However, it maintains restrictions on implementing certain projects and on the participation of companies or individuals linked to China, Russia, Iran, Cuba, and North Korea.
OFAC authorizes trade in Venezuelan gold and minerals
General License 51D authorizes certain transactions related to the export, sale, purchase, supply, storage and transportation of coal and minerals of Venezuelan origin, including gold.
The authorization may involve the Venezuelan government, Carbones del Zulia (Carbozulia), Compañía General de Minería de Venezuela (Minerven) and entities under Minerven’s control, provided that established U.S. companies conduct the operations.
The license also allows activities related to the commercial supply chain, including due diligence and commercial, legal and technical assessments, as well as logistics services, maritime transportation, insurance and port coordination. It also authorizes companies to process or refine minerals outside jurisdictions that the license expressly restricts.
New authorization for technology and services
General License 54C expands the framework for U.S. companies to supply goods, technology, software and services for the exploration, development, mining, extraction, processing, refining and production of coal and minerals in Venezuela, including gold.
The measure also allows companies to maintain, repair and refurbish equipment used in mining operations, as well as provide logistics, transportation and payment-processing services related to authorized activities.
Contracts for future investments
The third authorization, General License 55A, allows companies to negotiate and enter into contingent contracts for new investments in Venezuela’s coal and mineral sectors.
The authorization covers potential exploration, development, mining, extraction, processing and refining projects, as well as the expansion of existing operations and the creation of new joint ventures.
However, companies must obtain additional authorization from OFAC before they can execute those contracts.
The term “contingent contracts” includes deferred-execution agreements, memoranda of understanding, offers related to bidding processes and other instruments that prepare the groundwork for future investments.
Payments under U.S. oversight
The new authorizations maintain a financial oversight framework for transactions involving sanctioned Venezuelan entities.
For transactions covered by General Licenses 51D and 54C, contracts must require parties to resolve disputes in the United States, the United Kingdom, France or Singapore.
In addition, parties must route certain monetary payments to blocked persons through Foreign Government Deposit Funds or other accounts designated by the U.S. Department of the Treasury.
Companies that use these authorizations must also submit periodic reports to U.S. authorities detailing the parties involved, the goods or services supplied, transaction volumes and values, and payments made to the Venezuelan government.
