Ecuador minister says country will support responsible mining

Ecuador’s mines ministry hopes to foster “a responsible and honest mining industry that promotes a sustainability concept, in order to support and develop a strong industry that not only respects the environment, but contributes to social improvement.”

RENO, NV - 

During a presentation this week at the Denver Gold Forum, a top Ecuadorian official said President Rafael Correa and his government support responsible mining and believe the country's future is mining.

Javier F. Cordova, acting vice minister of mines for Ecuador, also outlined the elements for a sustainable mining policy for Ecuador.

Cordova estimated there are more than 200 mining companies, mainly TSX-listed juniors, with investments in the country.

The most advanced projects are Aurelian's Fruta del Norte (TSX: AUR), Corriente Resources' Mirador, International Minerals Corp's Rio Blanco and IAMgold's Quimsasocha. Cordova said that these companies estimate that their combined total project reserves include 22 million ounces of gold, 30 million ounces of silver, and 26.5 billion pounds of copper.

Cordova noted that the 13.7-million ounce inferred resource believed to be in Fruta del Norta "would demand a huge investment in our country and the creation of employment. Meanwhile, Corriente Resources' (TSX: CTQ) four main projects would require a $2-billion investment, he added.

International Minerals (TSX: IMZ) has invested more than $70 million in its two main projects, Rio Blanco and Gaby, located in the Azuay Province. Cordova estimated that IMC has a combined proven and probable reserve of 5.6 million ounces of gold and 4.2 million ounces of silver in both projects.

Meanwhile, IAMGold (TSX: IMG) has approved an $11 million budget to complete its feasibility study and continue exploration at its Quimsacocha project near Cuenca in the Azuay Province, he said.

SUSTAINABLE MINING POLICY

Cordova also outlined the elements hoping to be accomplished in Ecuador's new sustainable mining policy, which will hopefully be adopted by the Constituent Assembly after a referendum election scheduled for this month determines if the country will have a new constitution.

The new draft mining law will be submitted to the new legislative body in October 2008, according to Cordova.

Among the elements in the legislation are:

·         Stable regulatory, economic and social frame

·         Development of a strong and modern mining authority

·         Globally competitive mining industry

·         Contribution to the economic and social development of the country

·         Social and environmental responsibility

·         Education and training for the mining work force

·         Creation of a competitive and efficient National Mining Company that can contribute to the development of the mining industry and the nation

"From the government point of view, we are seeking a modern mining law, committed to the country's development, that promotes respect for the environment and secures benefits for communities that host mining projects," Cordova stressed.

Meanwhile Ecuador has already begun a consultation with different industry actors to establish technical, local, social and environmental criteria to be included in the new law's framework.

Cordova said the new mining law will contain environmental protection fundaments, and require NSR royalties ranging from 3 to 8%. Mining companies will also be required to make contributions to communities and local government.

Production contracts will be generated with legal guarantees for investment and economic stability.

Annual concession payments and minimum investment per hectare will also be required, Cordova said. There is no limit to the number of concession, but the maximum size per exploration concession will be 5,000 hectares, while exploitation concessions will be set at plus or minus 5,000 hecatres.

"A more efficient procedure for granting concessions" will be established, which avoids discretional decisions from authorities with respect to rights to concessions, he advised. A title to a concession provides for both exploration and exploitation, and will be implemented through "an easy and fast procedure to move from one phase to another."

Transparency will be stressed in granting the concessions with a goal of avoiding speculation. Procedures will be implemented that guarantee security of investment and avoid corruption as well as encourage better state participation in mining investment, he advised.

Cordova said the aim of the government will be to "attract foreign and national companies with best practices in the industry."

He stressed that a windfall revenue tax will not be a part of the new mining law.

In his presentation, Cordova also detailed a number of remedies now underway to address current challenges the government and the mining sector are facing.

The Ministry of Mines and Petroleum is now working to create favorable conditions for foreign investment in and development of mining projects. Cordova said that for the most advanced projects, the ministry will authorize environmental controls, community relations and other programs until the new mining law is enacted.

Although mining and exploration activities were suspended in the country last April, Cordova said the government plans to give emergency jobs for all workers that were affected by the suspension.

MINEWEB UPDATES ITS SITE THROUGHOUT THE DAY - FOR THE LATEST MINING AND METALS NEWS AND ANALYSIS ARTICLES CLICK ON WHAT'S NEW

SUBSCRIBE to Mineweb.com's free daily newsletter now.

Print story      Email story      Subscribe to free newsletter
Related Links ARTILCES:  Corriente Ecuador copper project in the sights for Xstrata, Codelco, Tongling  First details of proposed Ecuador mining law eases some fears, raises others  Latin American boom faces problems if commodity prices continue to fall  OTHER PAGES:  SUSTAINABLE MINING CENTRAL SOUTH AMERICA

Back