China Visit Adds to Correa Pro-Mining Position

By Silvia Santacruz
Ecuador Mining News

WASHINGTON, D.C., November 26th, 2007— In a move signaling his administration’s support for large-scale mining, last week President Rafael Correa invited Corriente Resources (TSX:CTQ) to participate in his trade mission to China, where he signed bilateral agreements covering different areas, including mining. This follows Correa’s pro-mining statement a few weeks ago during his weekly radio program. View President Correa YouTube video

The news of the trade mission arrives one week prior to the convening of Ecuador’s Constituent Assembly, which on November 29th will begin altering the rules for international mining companies operating in the Andean country. The 130-member legislature body will rewrite the constitution and amend the attractive mining law, which was modified only seven years ago abolishing royalties and expensive concession fees to favor foreign investment.

But, alongside investors’ relief with Correa’s pro-mining position, there have been conflicted messages. Former MEM minister Alberto Acosta, presumptive speaker of the Assembly, is a mining critic who assures that there will be no large-scale mining operations in Ecuador. The result: nervousness in the stock market, and major companies’ indecision to merge with junior firms already in Ecuador until the Assembly debates the mining issue, probably next January 2008.

Despite Acosta’s threats to prevent large-scale mining from operating in the country, the current minister of mines and petroleum, Galo Chiriboga, has dismissed Acosta’s statements. In an interview with El Comercio newspaper, Chiriboga assured that the government’s position on mining differs from Acosta’s. Read El Comercio article

In addition to Chiriboga’s clarification, there are more positive signals for the mining industry in Ecuador. As mentioned above, last week President Correa invited representatives of Corriente to meet President Hu Jintao of the People’s Republic of China. “We continue to see strong signs that Ecuador is open to foreign investment and view this trip as an important step by the Ecuadorian Government in focusing on the urgent investment needs of the country,” wrote Corriente’s Senior Vice President, Dan Carriere, in an e-mail to investors.

Correa’s statement [in the YouTube video] about how the “future of this country might be mining,” and the China invitation to Corriente are both important to the industry due to the president’s influence over the Constituent Assembly. Eighty of the Assembly’s 130 members hail from Correa’s own political party, Alianza Pais. That gives him 61 percent of the votes, more than the necessary majority to pass any constitutional draft or new law. The Partido Sociedad Patriotica of former president Lucio Gutierrez has only 18 members, the Prian party of former presidential candidate Alvaro Noboa has nine, and other groups have five or less representatives each.

Correa’s requirements [with respect to the environment, communities, workers, and environment] for international mining firms are nothing new. Most companies are already running ambitious medical and educational programs in the communities where they operate. Thus, experienced international mining entrepreneurs are prepared to lead the nation in producing its natural resources with the best environmentally-friendly practices, and with corporate social responsibility programs.

This could be the beginning of a better future for the abandoned and impoverished remote towns with no other hope to develop, but mining. And judging from his statement about mining perhaps contributing to the nation’s future, Correa might sense this. “Several American cities, such as San Francisco and Denver, started with mining. They made this industry sustainable investing their revenue building schools and roads,” states Paul Driessen, author of Eco-Imperialism: Green Power, Black Death.

An Industry Worth Its Weight in Gold*

By Silvia Santacruz

The thirty international mining companies operating in Ecuador received Carondelet’s backing when President Rafael Correa stated that mining will be the engine of the country’s development.

The metallic mineral wealth of Ecuador has world-class deposits. Aurelian Resources’ Fruta del Norte project has proven resources of 13.7 million ounces of gold and Corriente Resources’ Mirador project has 11 billion pounds of copper. In monetary terms, they are equivalent to $11 billion and $33 billion, respectively.

Mining’s benefit, however, goes beyond the simple income that the government can achieve via royalties, which will be imposed during the Constituent Assembly. This industry generates jobs and community projects, and invests hundreds of millions of dollars to revitalize the national economy.

But foreign mining firms also need reassurance and depend on Montecristi’s decisions to continue their operations in Ecuador.

If the new legal framework imposes a disproportionate royalty that reverses the viability of their projects, revokes their concessions, or bans open-pit mining, the companies will migrate to neighboring countries that offer better conditions, such as Peru and Chile.

Violent demonstrations by some members of the communities surrounding the mining projects also diminish international confidence. These people are inflamed by the apocalyptic predictions of environmentalists who forecast total destruction if mining operations begin. Thus, the Assembly has an historic opportunity to limit the role of internationally-financed extremist NGOs.

If Montecristi catches Carondelet’s optimism, foreign mining companies will be the country’s best allies in the drive to reduce poverty and eliminate the irony of maintaining impoverished communities literally settled on million-dollar deposits of gold, silver and copper. Read original in El Comercio

[*Originally published in Spanish in the Sunday, December 16, 2007 edition of El Comercio newspaper, Quito, Ecuador.]

Article Source: ecuadorminingnews.com

Ecuador’s Development Relies on Mining: Correa

Presidential Press

Quito, December 1, 2007 — “How do we finance development?” the head of state asked the audience during his radio program on Saturday. And his answer was focused on mining: “We have one hundred billion dollars worth of copper,” he said, referring to the metal reserve located in the Zamora Chinchipe province.

“We have to tolerate the environmental impact that would affect us all,” he stated when suggesting that there is no way to ignore the cost-benefit factor if we want to end the poverty of most Ecuadorians.

Should we leave everything intact or should we access the country’s mineral wealth, which nears $200 billion? The dilemma is underlying for the president, especially because he understands the issues of environmental degradation and global warming.

In any case, the balance is weighted toward the need to guarantee the people’s welfare. “If there is such an income we are going to have to allow mining to benefit the development of the Ecuadorian people,” he stressed.

Finally, speaking about this issue, he warned that the proposal to have the oil remain underground in the Yasuni National Park will experience the same fate, if there is no response from the international community to compensate non-exploitation.

Article Source: ecuadorminingnews.com

The World’s New Mining Frontier: ECUADOR

Author: Elena Sukikova

Very significantly, foreign mining companies can now own 100% of an Ecuadorian concession, without local partners. The exploration-to-exploitation process is now unified under one license—a first in the developing world. The tenure of mining concessions has been extended to 30 years, and mining companies are provided with credible legal guarantees to mine a property following a positive feasibility. Why then all this talk of Rafael Correa’s socialist credentials?

Foreign investors in Ecuador were certainly not celebrating on the night of December 04, 2006. Rafael Correa, who had been officially declared Ecuador’s president earlier in the day, had warned that “Ecuador’s substantial resources must be used for the benefit of Ecuador’s poor, and Ecuador’s foreign debt must be rationalized if Ecuador has to survive as a nation.” Shades of Venezuela’s Hugo Chavez?

No. As legislative developments during the course of 2007 were to prove, President Correa’s policies were predicated on two fundamental realities: Ecuador’s need to upgrade the lives of its impoverished majority and Ecuador’s almost total dependence on foreign capital to achieve meaningful social change. “The laws governing oil and mining were archaic, heavily skewed in favour of foreign, mainly American, investors for decades,” a Quito editor wrote in an opinion piece earlier this month. “What Correa did was to find a balance between the interests of his electorate on one hand and the requirements of foreign corporations on the other. What we are seeing, in effect, is the creation of a highly conducive and realistic investment environment.”

Very significantly, foreign mining companies can now own 100% of an Ecuadorian concession, without local partners. The exploration-to-exploitation process is now unified under one license—a first in the developing world. The tenure of mining concessions has been extended to 30 years, and mining companies are provided with credible legal guarantees to mine a property following a positive feasibility. Why then all this talk of Rafael Correa’s socialist credentials?

Much of the sabre rattling concerning Ecuador’s slide into socialism is influenced by President Correa’s call to revise and renegotiate petrochemical deals even prior to his victory in December 2006. “Of every five barrels of oil the multinationals produce, they take four and leave one for the State—that is unacceptable,” Mr. Correa said at a public meeting in October 2006. A trained economist, Rafael Correa called for a “fair and equitable” distribution of oil revenues.

In other words, while international investors seek above-average returns when they invest in a country like Ecuador, the level of those returns must be determined pursuant to a reasonable reward ratio for Ecuador itself. Given the widespread notion inside South America that the free-wheeling era of multinational deal-making is over, Ecuador’s recent amendments to Hyrdrocarbon and Mining laws do, in fact, serve to create a sustainable long-term regulatory matrix for foreign investment.

Make no mistake about Ecuador’s mining resources. The Incas were extracting gold in the south-western hills of Ecuador when the Spanish arrived in the region, around 1550. No actual records of gold production were available until 1887, when South American Development Company [SADCO] acquired control over key gold deposits; in the fifty years that followed, SADCO recovered 3.5 million ounces of gold and 17 million ounces of silver from 8 million tonnes of ore, according to official figures; unofficial estimates are much higher. SADCO’s departure from Ecuador, triggered by rising costs and an extremely erratic supply-demand market a that time (1950s), did not bode well for gold mining; government bureaucrats, who ended up running SADCO’s properties, did nothing of value to either improve efficiency or identify new reserves.

Today, the historical mismanagement of Ecuador’s mineral reserves presents a unique opportunity for mining companies; the bulk of the mining wealth in Ecuador’s south-western terrain remain unexploited while the ongoing work of thousands of small-scale miners clearly suggests an abundance of gold and silver resources spread over a vast area bordering mineral-rich Peru and Chile.

Without doubt, Rafael Correa’s vision is dominated by his desire to improve the day-to-day existence of his countrymen. But he knows that an investor-friendly legal and regulatory framework is critical, if that vision is to become a reality.

About Author  
Authored by: Elena Sukikova, a political and economic analyst specializing in the Andes region. Opinions expressed herein are solely those of the author, and no related or unrelated entity bears any responsibility for the author’s conclusions.
Email: info@momentumgain.com
URL: www.spirit-exploration.com

Article Source: http://www.1888articles.com