Uncertainty over mineral developments in Ecuador
Posted on January 12th, 2008 by John Chadwick
Cornerstone Resources has provided comment on Ecuador, saying, “in the land that is now proven to host mega deposits of mineral commodities there is a growing consensus that there is great potential for new discoveries.” During late 2007 there was growing optimism over statements attributed to President Correa who was reported to have said, “Yes to mining, but with adequate controls, with adequate community consultations, respecting the community, the environment and the state.”
Cornerstone considered that this indicated that if these four points were fulfilled, mining would be welcomed in Ecuador. The company ays it has “worked hard to perform beyond compliance in all these areas and we believe that we are recognised within Ecuador for having done so.
“However, during late December the wind was taken out of the sails of exploration companies with significant interests in Ecuador when the
government unexpectedly announced a 70% windfall profits tax. The uncertainty created by that announcement caused a market reaction that was swift and brutal in an already jittery market. Until there is further clarification of how this windfall profits tax will be implemented there may be continued market volatility.”
The company says it, the Chamber of Mining and its members are very active in communicating with the Ministry of Mines and Petroleum (MMP)
on this matter.
Cornerstone notes a news report on January 8, 2008 (Source: TELEGRAFO (Guayaquil)): “This week the Ministry of Mines and Petroleum reported that it will hold meetings with the mining sector in order to define a law that strengthens investment in mining and royalties for the State, as well as strengthening environmental controls. César Espinosa, president of the Chamber of Mining of Ecuador, said that there are three or four deposits of copper, molybdenum, and gold, which will mean a value in land resources of approximately $217 billion. He said that conceptually, he agrees with the government’s intention to reform the Mining Law in the sense of having an adequate and clear legal framework that better contributes to the State’s development of an industry that will be able to replace petroleum. The president of the Chamber of Mining specified that specific points to the reform are yet unknown. Nevertheless, he
indicated that there are agreements on general issues like the need for a contribution from private industries to the State, and greater and better environmental controls, among other aspects.”
Cornerstone goes on to say that “despite the uncertainty created by the windfall ‘profits’ tax
announcement and the need for clarification there are signals from the MMP that there is a desire to stimulate the development of mining projects in Ecuador. Obviously that will require an overall tax regime that meets the needs of all parties.
“At Cornerstone we are looking beyond this current period of uncertainty to advancing, with current and potential JV partners, the potentially
significant assets we have developed in Ecuador since starting operations there in 2005.
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