Miners "very worried" about assembly's suspension of concessions - Ecuador

Monday, April 21, 2008

Representatives from Ecuador's mining industry are "very concerned" about a decision by the country's constituent assembly to suspend mining concessions, a sector leader told BNamericas.

"We are very worried because the mandate deprives companies of some concessions that were awarded legally," said the Guayaquil-based mining industry source, who asked not to be identified.

The mandate announced Friday (Apr 18) includes an immediate 180-day suspension of activities on virtually all mining concessions in the country while a new mining law is approved.

On Monday, Ecuador's mines and oil minister Galo Chiriboga unveiled the new draft mining law that aims to revert 4,474 mining concessions throughout the country.

The measure will freeze investments of US$2bn expected over two years and eliminate the creation of 70,000 jobs over the next 10 years, said another industry representative, Cuenca mining chamber director Javier Cruz.

Cruz claimed Ecuador's mining potential is worth more than US$220bn based on just four projects that have already been identified and said there are many more being explored.

COMPANIES REACT

Vancouver-based Corriente Resources (TSX: CTQ, Amex: ETQ), which holds the Mirador copper project in southeast Ecuador, said in a statement that it finds several of the articles in the mandate very confusing and has not yet identified any potential impact on its concessions.

However the company's CEO Ken Shannon believes the Ecuadorian government's message is that "there is a place in Ecuador for responsible mining and Corriente supports the president [Rafael Correa] in advancing this message."

Toronto-based Aurelian Resources (TSX: ARU) is awaiting formal notification from the ministry as to the mandate's effects on its operations. But the company pointed out that the mandate limits mining companies to a maximum of three concessions.

"Should this apply to Aurelian, the company will retain title to the single concession containing the Fruta del Norte epithermal gold-silver deposit, as well as two others that Aurelian believes contain the most prospective geology for additional epithermal discoveries," the company said in a statement released Monday.

Meanwhile, Toronto-based IAMGOLD (TSX: IMG, NYSE: IAG) said it is keeping a close eye on the situation and will seek clarification from authorities of any potential impact at its Quimsacocha project.

The company has faith in the Ecuadorian government's ability to achieve a modern, sustainable mining industry, which will play an important role in the future growth of the country, it said.

"NOBODY'S COLONY"

Chiriboga said that if lawsuits crop up filed by mining companies operating in Ecuador, the state will defend its stance with the argument that it is not returning mining concessions to the state or confiscating them, but rather putting an end to the chaos that typifies the sector.

The Guayaquil mining representative said it will be important to wait for further reaction from companies.

The minister has invited all mining companies in the country to become involved in the dialogue in order to draw up the new mining law and advised that Ecuador's state sovereignty and right to choose must be respected since "we are nobody's colony."

However, he added that foreign investment is welcome in the country. The minister also presented an executive decree to create a national mining company.

No officials from Ecuador's national mining chamber were available for comment when contacted by BNamericas.

Harvey Beltrán
Business News Americas