Venezuelan coal: the OFAC license names Carbozulia, not the mines

On September 2 the Treasury Department replaced three Venezuela general licenses, and in all three it made the same substitution: where the text read “minerals” it now reads “coal or minerals.” That change of wording brought in a sector no license had ever named, and with it a company that appears in the operative text for the first time: Carbones del Zulia S.A. The name is new to the sanctions record. The company is not. It is forty-eight years old, and it stopped mining the coal long ago.

The change fits in two words

General licenses are written authorizations Treasury issues to permit, under conditions, transactions that sanctions otherwise prohibit. Twenty-one are currently in force on Venezuela. On September 2 three of them changed version: GL 51D supersedes 51C, GL 54C supersedes 54B and GL 55A supersedes 55. The director of the sanctions office signed all three that same morning, between 8:29 and 8:31.

Read against their prior versions, the change is a vocabulary substitution applied systematically. The forum where contract disputes must be resolved —the United States, the United Kingdom, France or Singapore— is unchanged. Routing payments through an account under Treasury custody is unchanged. The exclusions covering Russia, Iran, North Korea, Cuba and China are unchanged. The mandatory reports to the State and Interior departments are unchanged: every 30 days under the trade license, every 90 under the supply license. One thing moved: which mineral the permission covers.

The ceiling did not move either. That is what separates this authorization from an opening. GL 51D excludes, in paragraph (b)(7), the exploration, development, mining, extraction and production of coal in Venezuela, along with the formation of joint ventures for those activities. GL 54C repeats the bar on forming new entities. GL 55A allows contracts to be negotiated, but requires their performance to be expressly contingent on a later authorization the license does not promise. Venezuelan coal can be bought, shipped, refined, and equipment can be sold to whoever produces it. Mining it cannot.

The clause that covers one company and not the other

The parties paragraph in all three licenses lists the Government of Venezuela, Carbones del Zulia S.A. and CVG Compañía General de Minería de Venezuela CA —Minerven, the state gold company. It then adds an extension: “or any entity in which Minerven owns, directly or indirectly, a 50 percent or greater interest.” The clause hangs off Minerven. For Carbozulia there is none.

That asymmetry matters because Carbozulia has not operated its own concessions for decades. Its corporate history states it plainly: on April 25, 1986 the coal mining concessions under its responsibility were partially transferred to Carbones del Guasare, which began production and exports in 1987 at the Paso Diablo mine; on May 31, 1995 a further block was granted to Carbones de La Guajira S.A., which started that same year at the Mina Norte deposit. The mines of Zulia coal have been run for forty years by companies the license text does not mention.

Forty-eight years changing hands

For anyone weighing a purchase of Venezuelan coal, the counterparty the license names has an unusual corporate biography. The company publishes it itself. It explains why the question of who you are buying from has no short answer.

Six moves in forty-eight years, and none of them fully erases the previous one: being attached to a ministry says nothing about who the shareholder is, and a transfer announced at a public event is not the same as a verifiable registry entry. Neither the company’s own website nor the ministry page it reports to publishes its current shareholding or any production figures.

What a buyer has to resolve

The license authorizes transactions with a specific company. The actual operation —coal moving out through Lake Maracaibo, in the northwest of the country near the Colombian border— involves companies the license does not name, and whose current relationship with Carbozulia is not established in any public source consulted. That distance between the authorized name and the chain that delivers the cargo is the due diligence the license passes to the buyer, and which the text itself reinforces by requiring documented chain of custody for the mineral in every thirty-day report.

What to watch from here

Three signals will tell whether the September 2 move is a vocabulary correction or the first step of something larger. First: whether a license appears that authorizes production, which is where the permission stops today for coal and gold alike. Second: whether Carbozulia gets a named annex of authorized companies, like the one the oil-sector license maintains for six international operators —that annex is the difference between a generic authorization and a list of who may sit at the table. Third: the first contingent contract signed under 55A, because it will set the template the rest follow, starting with the forum it selects.

In the meantime, the amendment that did happen has a verifiable and bounded effect: frequently asked question 1247, updated the same day, extends to coal the perimeter within which a non-U.S. person can operate without exposure to secondary sanctions, provided the conditions the license itself lists are met. For a commodities trader outside the United States, that is the concrete thing that changed on September 2.