Thanks CalgaryLady.
I think this could be very good for the company if the government has responsible folks making decisions. It seems to me that they do. Although superficially similar to Venezuela, scratch the surface a little and you will find that Correa and Chavez are from extremely different places.
From what I have read about the Correa, he seems quite reasonable. I support his desire to see more revenue from mining and oil reach the poor in Ecuador, and I expect that he will promote mining to see that it does. He is smart enough to know that it won't happen with state control though, and has likely learned from Mexico, et al. how not to do it. He has a Ph.D from the University of Illinois in economics, too.
The environmentalists say that the government won't allow it, while I believe that Ascendant thinks that they will. My money thinks that Correa will see the benefit of the mine for Ecuador. The oil won't last forever, and that is what generates most of the foreign exchange now.
Time will tell, although the pps doesn't seem to be reacting one way or the other right now.
Here is an article I just found that came out today (after I wrote the comment):
OIL ROYALTY REVENUES A POSSIBILITY
Ecuador’s President contemplates mining law change to benefit nation’s treasury
President Rafael Correa, an economist, may revise the nation’s mining law to generate more revenue for the Government of Ecuador, vowing not to “kneel in the face of foreign investment.”
Author: Dorothy Kosich
Posted: Monday , 26 Mar 2007
RENO, NV -
As Ecuador changes the nation's mining policy, Deputy Mining Minister Jorge Jurado said the nation is seeking a model in which both mining companies and the state can benefit.
Ecuador's Minister of Energy and Mines Albert Acosto met this past week with members of the National Chamber of Mines and the Camara de Mineria del Ecuador to discuss Ecuadorian President Rafael Correa's proposed policy changes.
If a mining reform bill is to be introduced, it could take three to four months to prepare, Business News Americas reported Friday.
Acosto claimed that the nation's mining industry does not contribute much to the nation's treasury even though mineral concessions occupy an area of almost 11% of Ecuador's total land base. On March 14, President Correa said he would revisit oil and mining deals and restructure Ecuador's foreign debt.
At the time, Correa told foreign reporters, "We are not going to make our country kneel in the face of foreign investment." Ecuador's largest foreign investor is the Calgary, Canada-based energy company EnCana. Along with Occidental Petroleum and Chevron-Texaco, EnCana is part of a trio that virtually controls Ecuador's domestic oil industry.
Correa has openly opposed Chevron-Texaco in a $6 billion lawsuit filed by local residents and indigenous groups in the Oriente Region, who claim that the oil company dumped 18 billion gallons of polluted water onto the floor of the Amazon rainforest.
An economist with a leftist political orientation, Correa may consider imposing royalty taxes on oil and mineral exports to pay for health, education and infrastructure projects in Ecuador. Nevertheless, Correa has not identified any particular energy or mining contracts up for renegotiation.
Colorado-based Ascendant Copper's Junin copper/moly exploration project has generated opposition from environmental NGOs and some local groups. Last November, Ascendant signed a community development agreement with communities near the Junin project. The company agreed to contribute $4 million over the next four years for social programs and community during the duration of the exploration phase of Junin.
Vancouver's Corriente Resources had its Mirador copper project activities suspended by the Ministry of Mines after a series of protests in the Morona-Santiago and Zamora-Chinchipe provinces against resource development. Nevertheless, for the past six years, Corriente has provided medical care, housing, education and employment to three nearby villages
After several unsuccessful negotiating sessions with the protesters, the federal government asked Corriente to temporarily suspend its Mirador project camp activities to aid in the negotiating process. Mirador production had originally been planned for late-2008, but is now delayed to mid-2009. Corriente has been negotiating with the Correa Administration to resume the fieldwork. In a January news release, however, Corriente said, "While the government has indicated support for such resumption, it has yet to provide clear and sufficient indications of when this will be achieved."
Under current mining law, the National Government of Ecuador cannot revoke a mining concession unless the concession holder consistently fails to comply with the nation's mining law. All government royalties or taxes other than the National Corporate Tax have been eliminated for mining investment. Provincial and local governments are not permitted to collect local taxes on mining, nor enact mining regulations.
In a recent interview with Business News America, Deputy Mining Minister Jurado stressed that neither communities nor the environment will be left out during the development of large scale mining projects. He also discussed the possibility that the Correa Administration could seek more revenues from mining.
Ironically, Ecuador is considered one of the least explored nations in South Africa despite the presence of gold, copper, silver, zinc and coal.
