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Ecuador wants more community clout for foreign-owned mining projects

President Rafael Correa has assured foreign mining and exploration companies and Ecuadorans that he supports responsible mining, which he defines as giving local communities a stronger voice in local mining and exploration projects.

Author: Dorothy Kosich
Posted: Monday , 28 Apr 2008

RENO, NV -

While junior mining and exploration companies claim that Ecuador President Rafael Correa has assured them that responsible mining will be allowed in Ecuador, Correa stressed Saturday that "communities will have to be shareholders in these mining projects."

During his weekly radio address Correa said local communities, government and mining stockholders should all be shareholders in mining projects. However, Correa added that he rejects fundamentalist -type groups, who are vehemently opposed to the mining, petroleum and hydroelectric power sectors because their beliefs would financially bankrupt the country.

Correa said he would support large mining projects if they benefit the poor nations with billions of dollars in revenues. Currently Ecuador does not mine significant quantities of precious metals. "For their (companies') benefit, to lower the social conflict...to have clear rules of the game and have national consensus the mining decree was needed," Correa said. "We will have to try a new legal framework ready as soon as possible. ...We welcome foreign investments."

Last August Correa claimed that concessions for large-scale mining operations in the country have generated extremely negative effects for local communities, which he asserted were not previously consulted as established by the constitution, and on the state, which receives no mining royalties in most cases.

At the time, the domestic, social NGO, the Defense of Life and Sovereignty has called for all foreign mining and exploration companies to leave Ecuador. However, Correa said at the time, that it was not possible to cancel most of the mining concessions because Ecuador would risk being sued by the companies for millions of dollars.

Ecuador's Mining Chamber said nearly 1.8 million hectares have been granted to mining companies through 1,200 mining concessions, and contracts for another 1.6 million hectares are in the pipeline.

Earlier this month, Ecuador's Constitutional Assembly passed a Mining Mandate. Correa said the purpose of a recently enacted Mining Mandate was to draft and implement the new mining law so that responsible mining can proceed. The Mining Mandate limits companies to a maximum of three concessions, imposed an immediate 180-day suspension of activity on mining concessions throughout the country, invalidates some claims, and provides for the possible creation of a state-owned mining enterprise.

Several foreign mining companies met recently with President Correa and other top officials, including the Minister of Mines and Petroleum, the Deputy Secretary of Mines, the Mining Advisor to the President, the Minister of Politics, and the Business Advisor to the President. The companies included Aurelian Resources, Cornerstone Capital Resources, Corriente Resources, Dynasty Metals & Mining, Ecometals, Iamgold, International Minerals and Salazar Resources. The companies said they were told the suspension of mining activity is to enable the government to organize and pass new mining laws.

The President invited the mining companies to meet today with the ministry to help formulate the proposed new mining law.