Ecuador assembly revokes most mining concessions

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QUITO, Ecuador: Ecuador's constitutional assembly on Friday approved a decree revoking most of the mining concessions in the country, following up on the leftist government's pledge to take greater control over natural resources.

The decision by the government-controlled assembly, which is writing a new constitution, suspended some 3,100 of the 4,112 active concessions in Ecuador and 1,220 concession requests. Affected companies include Canada's Aurelian Resources Inc., EcuaCorriente and Iamgold Corp.

President Rafael Correa, who is a close ally of Venezuelan President Hugo Chavez, said the decree will not "impede future concessions, but rather, the current ones, the majority of which are awful."

"The current dilemma is not whether to say yes to mining, but to seek economically, socially and environmentally responsible mining," he said in a presidential statement.

The 130-member assembly, which is acting as Ecuador's legislature and can issue rulings that cannot be vetoed by Correa, overwhelmingly approved the decree. The measure also included the creation of a state-run mining company.

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Mining output in Ecuador is minimal, but many companies are exploring for gold and copper.

Shares of Aurelian closed down 31.5 percent on the Toronto Stock Exchange after the decree was passed. Iamgold and the International Minerals Corporation registered slight losses. EcuaCorriente is not traded on the exchange.

Iamgold "is still monitoring the situation and will seek clarification from authorities of any potential impact on its Quimsacocha project located in Ecuador," the Toronto-based miner said in a statement.

The company is developing the Quimsacocha mine in southern Ecuador, which it says holds an estimated 3.3 million ounces of gold. Iamgold added it would continue with a prefeasability study for the mine, scheduled for July.

In Quito, about 100 mine workers protested the decree outside the presidential palace. Opposition assembly members — most of whom abstained from the vote — are opposed to the decree.

"We are forgetting about international law," said opposition lawmaker Cesar Rhon. "We have a lot of lawsuits around the corner."

"Is this the signal we want to send to the world, that contracts aren't respected here?" he said.

Correa, a U.S.-trained economist, took office last year, vowing to increase state control of natural resources and the economy.

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AP Writer Leslie Josephs in Lima, Peru, contributed to this report.