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Ecuador to review mine concessions, seek royalties
Mon Mar 26, 2007 3:55PM EDT
reuters.com
QUITO, March 26 (Reuters) - Ecuador plans to revise its mining concessions and introduce royalty charges on foreign companies in the sector in an effort to boost state revenues, Energy Minister Alberto Acosta said on Monday.
Leftist President Rafael Correa has made a popular promise to rework oil and mining deals with foreign companies to increase state control over the Andean nation's natural resources.
"We are going to study all concessions," Acosta told reporters. "We are going to create a royalties system... so that the state participates in mining activity."
Ecuador eliminated royalties from its mining law in 2002 and currently only charges companies a levy after they register a concession, which amounts to between $16 and $36 per hectare of a mining area.
Correa's attempts to tighten state control over Ecuador's mining sector follow similar measures by his ally, Venezuelan President Hugo Chavez, who has pushed to nationalize energy assets and increase government control over mineral resources.
Ecuador lacks significant production of precious metals, but Canadian companies such as Corriente Resources (CTQ.TO: Quote, Profile, Research)(ETQ.A: Quote, Profile, Research) and IAM Gold Corp. have started exploring for gold and copper.
Acosta said Ecuador, South America's fifth largest oil producer, has received only $22 million in revenues in 16 years from the mining sector.
Earlier, Deputy Minister for Mining Jorge Jurado said in an interview the government mining law reforms would toughen access to new concessions, create royalties and enforce more environmental controls before any drilling.
"Ecuador's mining sector is at a breaking point," Jurado told Reuters. "We cannot give away our resources... but we want to offer these companies social stability so they can work."
Ecuador has handed out 4,112 concessions or around 2 million hectares of which only 16.6 percent are currently in production.
An annual survey by the Fraser Institute, an independent Canadian markets researcher, found that mining executives ranked Ecuador 51 out of 65 jurisdictions around the world in 2006 in terms of attractiveness for investment.
"There is a lot of uncertainty now, but Ecuador has great potential and mining companies will probably stick around to reap the benefits," said Michael Gray, a mining analyst with Pacific International Securities in Vancouver.
Daniel Carriere, senior vice-president of Corriente Resources Inc., which owns gold and copper projects in Ecuador, said the company froze $300 million in investment this year after the government suspended activity in its concession due to a conflict in a local community.
"Minerals are difficult to find around the world," he said. "We look at all corners to develop mining." |
