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AP: Ecuador revokes most mine concessions

By JEANNETH VALDIVIESO – 15 hours ago

QUITO, Ecuador (AP) — 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.

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.

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

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Ecuador set to revoke thousands of mining concessions

18 Apr, 2008 07:48:04

QUITO, April 17, 2008 (AFP) - President Rafael Correa said Thursday Ecuador was close to revoking some 4,000 mining concessions granted since 2004, many of them to US and Canadian companies, that have been idle and used solely for speculation.

A government-sponsored bill revoking about 80 percent of mining concessions in gold, silver and limestone deposits around the country will be voted on and likely approved in the next few days by the Constitutional Assembly, which is packed by Correa supporters.
While a list of the mining companies affected was not made available, it reportedly includes Canadian firms Ascendant Copper, Ecsa, Cornerstone, I Am Gold, Aurelian Resources and Dynasty Metal, as well as the US concern Lowell.

The bill is opposed by the Mining Chamber of Ecuador. One of its members, ECSA company, said through a spokesman the measure "puts the best salaries of the country at risk."

Another Chamber member said some 1,200 jobs were in jeopardy under the new regime that will likely slash some two billion dollars of investment in the sector over the next two years.

Correa said mining concessions made in 2004 under his predecessor Alfredo Palacios were granted improperly because local populations were not consulted.

The bill, he told foreign reporters, "will revoke all those concessions that were made illegally, haven't generated any investment and are used for speculation."

Correa said that some working mining concessions will be suspended for six months until new contracts are renegotiated.

"From there on, we'll start afresh with a new and more responsible mining development plan," said the president, who a month ago announced Ecuador held potential copper reserves that could put it ahead of world top copper exporter Chile.

"In terms of money, Ecuador's mining reserves amount to 200 billion dollars," compared to 70 billion in crude oil reserves, currently Ecuador's chief export, Correa added.

The mining sector in Ecuador is still in its exploratory stages. Its development depends largely on private enterprise, which in the past 17 years has invested one billion dollars and employed 120,000 people, according to Mining Chamber data.

The National Constitutional Assembly took over from the opposition-controlled national legislature in November, and is tasked with drawing up a new constitution by late May that will be submitted to a referendum.

President since December 2006, Correa is a close ally of leftist Venezuelan President Hugo Chavez. In the new constitution he aims to increase the role of the state in the economy, and broaden social policies in his impoverished nation.

http://www.lankabusinessonline.com/fullstory.php?nid=1616942919