Ecuador Wants Mining Exploration to Restart by August (Update3)
By Stephan Kueffner
bloomberg.com
May 9 (Bloomberg) -- Ecuador's government wants exploration of large-scale gold and copper deposits to restart by late August after suspending such activity last month, Mining Undersecretary Jose Serrano said in an interview.
Companies with mining operations in Ecuador rose on the comments, with Dynasty Metals & Mining Inc. climbing 5.9 percent from intraday lows and Aurelian Resources Inc. jumping as much as 6.5 percent after the remarks.
The Energy and Mines Ministry is drafting a new law to eliminate what President Rafael Correa calls widespread corruption and regulatory problems in the industry. Ecuador's constitutional assembly stopped commercial metals mining and exploration on April 18 and said the suspension may last as long as 180 days while the new law is prepared.
``This is an indication that the government is working toward getting the mining law in place and getting the companies back to work,'' said Wendell Zerb, a mining analyst at Cannacord Adams in Toronto. ``The timeframe is one of the key things.''
The government wants to keep the suspension of mining projects as short as possible, Serrano said at the Energy and Mines Ministry's offices in Quito.
``Once the law is in force, they will be able to start working immediately -- we expect in August by the latest,'' Serrano said. That will allow mining of metals like gold, copper, and molybdenum to start by the end of 2009, he added.
New Mining Law
The new law, which he wants to have ready by May 29, will also limit environmental reviews to 60 days for new mines, Serrano said. ``We're going to be very strict in limiting the number of working days a bureaucrat will have to sign off on this,'' he said.
Correa has said Ecuador holds about $220 billion in reserves in metals and other minerals. The moratorium on mid- and large-scale mining projects also included plans to cancel most of the country's 5,000 concessions.
Aurelian, based in Toronto, gained 1 cent to C$4.78 at 3:59 p.m. in Toronto Stock Exchange trading, after earlier having declined as much as 8.8 percent.
Dynasty, based in Vancouver, fell 5 cents to C$3.01, after having declined as much as 4.9 percent. The shares have declined 56 percent this year.
Discussions with mining companies in Ecuador about the new rules will resume on May 12 and focus on letting work continue, Serrano said. Many companies are still working on projects because they have yet to be formally told of the ban, he said.
``In reality, we can't say that everything is paralyzed,'' Serrano said.
Mining Jobs
Some workers have been fired while work is suspended. Thousands of angry mining workers on May 6 demonstrated in front of the Carondelet presidential palace in Quito because of the threat to their jobs.
The government is offering temporary work in road construction and technical training for some of the former miners, Serrano said.
Ecuador is seeking to take more control of the country's metal deposits as prices for gold, copper and other minerals hover near records. The suspension followed moves by the government to renegotiate contracts with oil companies and take a greater portion of profits.
Correa's ruling Alianza Pais party is divided as to how best handle mining in the country. Some party leaders want to hold a referendum on whether to allow large-scale open pit mining in rain forests and other environmentally sensitive areas.
To contact the reporter on this story: Stephan Kueffner in Quito at skueffner@bloomberg.net
Last Updated: May 9, 2008 17:52 EDT |
