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Caracas -Venezuelan President Hugo Chavez saidon Wednesday he is preparing a law to allow the state to take over gold mining to prevent "mafias" from exploiting the country's natural resources.
The announcement came less than a week after the price of gold hit a record high of more than $1 800 an ounce as investors flocked to the safe haven amid market volatility fueled by the eurozone debt crisis.
"We have some of the largest gold reserves in the world, and... I will soon pass a law to take over the gold sector because it is in a state of anarchy, with mafias and smuggling," Chavez told state TV by telephone.
In December, Venezuelan lawmakers granted Chavez extraordinary legislative powers to govern the country by decree until the middle of next year.
The Venezuelan government has taken over a number of strategic economic sectors since 2007, and in 2010 expropriated some 500 000 hectares of gold mining land.
The leftist leader has frequently vowed to take over the gold sector in order to curtail environmental destruction and illegal mining, which accounts for 60% of local production.
"We will nationalise gold and we will convert it, among other things, into international reserves, because gold keeps increasing in value," Chavez said.
Gold producers in Venezuela are already bound by a 2009 law to sell 60% of their production to the country's central bank.
Major producers include the state-run Minerven, the Russian Rusoro, which mines gold in the southern Bolivar state, and Cuba's Geominsal, which carries out assessments, all in association with the state.
In 2010 gold production plunged 56.9% from the previous year, according to the ministry of industry and mining.
Venezuela has the 15th largest gold reserves in the world, with an estimated 365.8 tonnes, according to the World Gold Council.
