Will Attempt to Break World Domination by Multinationals : Venezuela Plans Aluminum Battle

From a remote Indian settlement near the Orinoco river, Venezuela is launching an ambitious bid to break the domination by multinational firms of the international aluminum market.

In an area of stunning beauty, where Indian tribesmen hunt tiger, deer and tapir amid palm-clad hills and waterfalls, plans are under way to exploit vast resources of bauxite.

Already among the world’s top eight producers of primary aluminum, Venezuela hopes to add bauxite mining to its output within three years.

“The multinationals aren’t enthusiastic about our plans because they know we would compete seriously with them,” Hector Soucy, the head of Venezuela’s bauxite company Bauxiven, told Reuters.

The world aluminum industry is presently dominated by six large companies--Reynolds, Kaiser, Alcan, Alcoa, Alusuisse and Pechiney--which control the entire process from bauxite mining to alumina processing and primary aluminum smelting.

Venezuela’s state-owned industry, with cheap hydroelectric power available and abundant bauxite deposits, is well placed to undercut the multinationals on costs.

The industry already has a capacity of 1.1 million metric tons per year of alumina and 400,000 tons of primary aluminum. It plans to raise this by 50% over the next decade.

The Pijiguaos deposits are estimated to contain 200 million tons of high-grade ore, enough to keep production going for 60 years at current production rates.

The mines lie some 315 miles south of Caracas in a virtually deserted zone populated only by Panare Indians.

A few hang around the incipient mining camp, clad only in loin-cloths and arm-beads. Up until only five years ago, the tribe was constantly battling the aggressive Piaroa Indians who raided their villages and took away their women.

Today, the docile Panare are taking advantage of the new camp to sell wicker baskets and necklaces to visitors.

The start-up of bauxite mining will transform this little-known corner of Venezuela. A town of 3,000 inhabitants will be built and small industries serving the mines will provide jobs for the Indians.

The Pijiguaos project is seen as a strategic new center of development in Venezuela’s frontier lands, although Bauxiven officials say security must be stepped up in view of guerrilla activity and drug-trafficking from nearby Colombia.

“The area is dotted with illegal landing strips, used by planes hopping over the Orinoco from Colombia,” one Bauxiven official said.

The mines were discovered in 1977, but the last government gave the project low priority. The first civil works contracts have now been signed and under Bauxiven’s new development plan, published this month, mining will start in July, 1986, with a goal of three million tons per year by 1987.

Around 60% of the $450-million investment will come from loans, with up to $100 million provided by the Inter-American Development Bank, Soucy says.

The project would save $140 million annually--the cost of 2.8 million tons of bauxite now imported from Brazil, Guyana, Suriname and Africa--and provide 2,800 jobs.

The Pijiguaos mines are located in an area of rare beauty. The ore lies on the top of a range of hills some 2,000 feet high, dotted with waterfalls and covered with small palms that give the mines their Indian name.

The brick-red bauxite literally covers the ground in a layer up to 42 feet thick which gives Los Pijiguaos ore a major cost advantage over subterranean mines.

With 110 miles of dirt road--unusable during the four-month rainy season--to the nearest small town, Bauxiven planners have nonetheless faced big transportation problems.

Present plans call for bauxite ore to be barged 400 miles up the Orinoco river to the Inter-Alumina plant at Puerto Ordaz, where it will be processed into alumina.

Although the 1,600-mile-long Orinoco is among the biggest rivers in the world, numerous sand banks and an irregular bottom make navigation difficult.

“We have decided nevertheless to avoid costly dredging and will simply suspend shipments for two or three months each year during the dry season when the river is low,” planning manager Daniel Iribarren said.

Bauxiven officials are convinced they can produce more cheaply than the other 19 countries presently mining bauxite.

“Our bauxite is lying on the surface just waiting to be taken away. We don’t have to use explosives,” Soucy said.