By Matthew Walter and Stewart Bailey

May 15 (Bloomberg) -- Crystallex International Corp. won't receive approval for an open-pit gold mine in Bolivar state because the project may cause deforestation, Environment Minister Yubiri Ortega said.

Venezuela won't allow any open-pit mines for gold, diamonds or coal, Ortega told reporters today in Caracas. Crystallex and Gold Reserve Inc., which owns a copper and gold mine in Venezuela, said on April 30 that they were told Ortega's ministry planned to reject or revoke their permits.

``If it can only be mined from underground, it'll be unlikely anything will be economic as an underground mine,'' Kerry Smith, a mining analyst at Haywood Securities Inc. in Toronto, said in a telephone interview.

President Hugo Chavez's government has nationalized parts of the country's oil, steel and cement industries to gain control over strategic parts of the economy. Crystallex has waited four years for permits to develop an open-pit mine to tap the country's largest gold deposit. Gold Reserve also planned a pit at its nearby Brisas site.

Neither Richard Marshall, a spokesman for Crystallex, nor A. Douglas Belanger, Gold Reserve's chief executive officer, responded to messages seeking comment. Both companies have said in past weeks that they will contest permit denials.

Crystallex fell 17 cents, or 17 percent, to 83 cents as of 4:15 p.m. in Toronto Stock Exchange trading. The stock has tumbled 81 percent in the past year.

Gold Reserve dropped 22 cents, or 10 percent, to $1.95 in American Stock Exchange composite trading. The shares have fallen 66 percent in the past year.

``We have a policy of doing all we can to stop global warming,'' Ortega told reporters awaiting a press conference with Chavez. ``Imagine the damage that would do to our forests.''

To contact the reporters on this story: Matthew Walter in Caracas at mwalter4@bloomberg.net; Stewart Bailey in New York at sbailey7@bloomberg.net.