Venezuela reopens iron mine with Chinese backing

Venezuela, with help from China, reopened on Friday the country's biggest iron mine and began construction on a nearby steel mill set to begin production in the fourth quarter of 2011.

President Hugo Chavez was present for the nationally broadcast ceremony in Bolivar state, 850 kilometers (528 miles) southeast of Caracas. The socialist head of state said China will contribute $70 million toward the cost of reactivating the Cerro Bolivar mine, which is to be operated with technical advice and cooperation from Swiss-based Commodities and Minerals Enterprise Ltd.

• The mine is expected to be producing at a rate of 3 million tonnes of iron ore annually by the end of next year. All of that output is destined for Chinese steel mills.

Chavez recalled that mining began at Cerro Bolivar in 1954 and was halted in 1997, "when the Washington Consensus prevailed and Venezuela was in the abyss, because it was an auctioned country." The term Washington Consensus refers to the market-driven, deregulatory and privatizing economic policies pressed on developing nations by the International Monetary Fund and World Bank with the encouragement of the US government.

Chavez and other Latin American leftists repudiate those policies, blaming them for widening their region's already huge gap between rich and poor, among other ills.

After inaugurating the reopened mine, Chavez oversaw the signing of an agreement to pay a $120 million advance to Brazilian firm Andrade Gutierrez for the construction of a new steel mill in Ciudad Piar that is supposed to be in operation by late 2011. "This event is a palpable demonstration that the country is not in crisis," Chavez said Friday, apparently responding to rumblings that the collapse in oil prices spells big trouble for Venezuela, a leading exporter of crude.

Venezuela Reopens Iron Mine with Chinese Backing