Venezuela to sign gold deal with Turkish company

Venezuela´s increasingly isolated government plans to sign a major gold refining deal with a Turkish company tomorrow, three sources with direct knowledge of the agreement told Argus.

Under the agreement, Turkish precious metals company Ahlatci Metal would refine gold extracted from open-pit mines in Bolivar state into certified monetary gold bullion.

The Venezuelan gold will be refined in Corum, Turkey at Ahlatci Metal's 365 t/yr precious gold refinery.

The agreement with Ahlatci could be signed in Ankara as soon as tomorrow by Venezuelan industries and national production minister Tareck El Aissami, a presidential palace official said.

Terms of the agreement including its value and duration were not immediately available.

The deal will be signed amid growing international recognition for the authority of the opposition-controlled National Assembly following autocratic president Nicolas Maduro´s disputed 10 January re-inauguration for a second six-year term.

The Maduro government will not seek the assembly's prior approval to sign the gold deal – as required under the 1999 constitution -- because the government-controlled supreme court suspended the legislature's constitutional authority in March 2017, the presidential palace official added.

An aide to El Aissami confirmed the minister is currently in Turkey finalizing details of the contract and discussing bilateral economic deals with the Turkish government and unnamed companies.

Turkey is among a handful of countries that recognize Maduro´s new government. Others are Russia and China, which have significant outstanding oil-backed credit with Caracas.

Turkish vice president Fuat Oktay attended Maduro's 10 January inauguration ceremony in Caracas.

Venezuela started negotiating the gold agreement with Ahlatci during Turkish president Recep Tayyip Erdogan's visit to Caracas last December, the palace tells Argus.

Erdogan personally introduced Ahlatci's chairman Ahmet Ahlatci to Maduro during his visit, suggesting that the Turkish company would be a good partner in executing the Venezuelan government's plan to build up its depleted hard currency reserves by refining Bolivar state gold into certified bullion, the palace said.

Venezuela's government has exported over 23.6 metric tons of gold valued at more than $900mn to Turkey since the start of 2018, according to Venezuela´s central bank.

A local Turkish diplomat confirmed the imminent gold deal and said the Venezuelan gold export figures for Turkey are accurate.

The gold is transported by air from Caracas aboard Turkey's flagship carrier Turkish Airlines, which since 2016 operates weekly flights between Ankara, Caracas and Havana and currently is developing plans to use Venezuela as a hub for expanded regional service to other Latin American destinations.

The Maduro government maintains it is shipping gold to Turkey for safekeeping against seizure by foreign governments unfriendly to Venezuela. Historically, Venezuela's central bank had most of its gold reserves stored at the Bank of England.

But Venezuela's eroding relations with the US and other western nations since Maduro first assumed the presidency in 2013 compelled Caracas to seek a new location.

Russia and China were discarded due to the Maduro government's concerns that gold reserves could be seized in lieu of missed oil debt payments, the palace said.

It is unclear what would happen to the gold currently stored in Turkey if Maduro is forced to resign before his second term ends at the start of 2025.

A National Assembly official said it is "very doubtful" that Erdogan's government will cooperate with the assembly's efforts to freeze Venezuelan state-owned assets overseas.

"Erdogan and Maduro are united because of their respective political problems with the US and the EU," the assembly official said.