CAF president: CVG is building Venezuela’s future

A two day visit by CAF President & CEO García to Corporación Venezolana de Guayana (CVG), industrial conglomerate formed by a series of State and private joint ventures which has a decisive influence on the country's development.

Created 32 years ago, the holding controls companies engaged in a range of activities including the most important hydroelectric plant in the country, bauxite, aluminum, iron ore, gold, waterways, railway projects, urban development and construction, industrial promotion, agro-forest and agro- industrial, among others.

From an enclave in Ciudad Guayana, Bolívar state, CVG has an area of influence of almost half a million square kilometers, where two giant rivers converge: Orinoco and Caroní. The latter river, with a length of 700 km, concentrates 90% of the country’s hydroelectric potential which gives the region relatively cheap power.

This fact has special importance for cheap production of steel and aluminum, which gives these industries excellent comparative advantages.

The iron ore district of Bolívar state is located on an 85 km strip which includes Cerro Bolívar, the largest iron ore deposit in the western hemisphere.

Venezuela’s iron reserves exceed two million metric tons of high tenor ore. One of the CVG companies, Ferrominera Orinoco, is the world’s seventh exporter.

Aluminum is the sector that has created greatest interest among foreign investors, especially Japanese, US, Italian, French and Colombian.

Venezuela is one of the world's largest aluminum producers, and is projected to become the world’s third producer in this decade (after USA and Canada), given its enormous bauxite reserves and the low cost of electricity.

Sierra de los Pijiguaos, south of the Orinoco, contains one of the largest bauxite deposits in the world, with proven reserves of 200 million tons.

These circumstances are ideal for a fully integrated aluminum production process. With this objective, three large companies have been formed with important participation of foreign capital: Venalum, with a Japanese consortium, is the second production plant among Western nations, larger than the Arvidia plant in Canada; Alcasa, with US capital; and Interalúmina with Swiss capital. Alcasa and Venalum have an installed capacity of 700,000 metric tons annually, which is planned to reach two million tons by the end of the century, while Interalúmina expects to be producing two million tons within two years. Bauxiven, with exclusively local capital, is producing around three million tons of bauxite annually.

CAF loans

The presence of the CAF president in Ciudad Guayana is one of a series of visits he is making to places with greatest impact on the development of member countries.

The objective is to obtain a precise and objective image for design of future strategies, with a view to guaranteeing optimum financing of the industrial and commercial activities of the Andean nations.

To date, CAF has granted loans to three CVG companies: Industria Venezolana del Aluminio (Venalum), Interamericana de Alúmina (Inter-Alúmina), and Electrificación del Caroní (Edelca). A US$55 million loan for the latter company was approved July last for the Macagua II hydroelectric plant project, which it will start operations within two years.

For the future, CAF is planning to expand its collaboration with other CVG companies, especially those with private sector equity participation.

García said he was satisfied with his visit because the area has enormous potential for private investors, both local and foreign.

. "This is an extremely privileged geographical area, - he said – with an extraordinary ecosystem, apart from its mineral wealth and hydroelectric potential. Moreover, an integrated economic development has been achieved - both industrial and urban – without affecting the environment. We really expect to maintain a close collaboration with CVG because this is where Venezuela’s future is being built."