In spite the severe economic and financial troubles the country has suffered during the last decade, Venezuela continues to be one of the foremost economic leaders of the region, with a very solid democratic system of government and a dynamic market representing a truly guarantee for national and foreign investments.
Bilateral trade is modest, although businesses continue to explore possibilities for expanding commercial interaction, particularly in the mining, agriculture and maritime sectors. Two-way trade was $7.7 million in 2013, down from $15.8 million in 2012. Australian exports to Venezuela totalled $6.3 million in 2013, consisting mainly of paper, non-electronic machinery and parts and pharmaceutical products (excluding medicaments). Imports to Australia from Venezuela were $1.4 million, consisting primarily of alcoholic beverages, crude animal matter and cocoa. In 2013, over 800 Venezuelans were enrolled in Australian education institutions.
The mining industry offers some potential for Australian involvement. Despite abundant mineral wealth and some of the world’s largest reserves of iron ore, aluminium, nickel and gold, Venezuela’s mining industry is underdeveloped and accounts for less than one per cent of GDP. The government has identified the mining industry as a key sector in the diversification of the economy away from petroleum, particularly as a source of export revenue and inputs for domestic industry.
A significant Australian investment in Venezuela is Orica’s joint venture with Venezuela’s Grupo Merand in two explosives manufacturing projects. One project involves an existing plant that supplies on-site bulk explosives for a large coal mining facility in western Venezuela. In the other, Orica Venezuela upgraded an existing packaged explosives plant and operates it on behalf of its owner, CAVIM, the state-owned military industries company. Excel Mining and RFC Finance Corporation are involved in two mining projects in Venezuela: a diamond project in the Guaniamo region and the Cosila coal mine.
However, the government’s action to nationalise strategic industries in addition to banks and food producers that do not comply with government regulations may give rise to sovereign risk concerns. Government policy is favouring ties with state-owned firms linked to governments that are either close allies of the Chavez administration or countries the administration wants as allies. The imposition of foreign-exchange controls requires all persons in Venezuela to obtain government approval to send any funds overseas. The difficulty in receiving payment in foreign currencies such as the US Dollar or the Euro has discouraged many small to medium sized Australian companies from exporting to Venezuela.
Australia-Venezuela trade 2008-14 fact sheet (40kb pdf)
Most text see Footnote 1
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