Ecuador begins ‘new mining era’ with Ecuacorriente copper development agreement

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By Kip Keen

Chinese-owned Ecuacorriente signed Ecuador’s first mining exploitation agreement on Monday over its $1.4 billion El Mirador copper project. Where for five years there was uncertainty over how much the federal government could exact from would-be miners in the country’s nascent mining industry there is now clarity. The Ecuacorriente exploitation agreement sets out the terms for how Ecuador will profit from mine revenue; among other stipulations 52 percent of benefits are to flow to its citizens.

The public share will undoubtedly strike many as steep. This is a widely shared sentiment among analysts and miners alike. But the Ecuadorian government has been dogged in setting its price, one which it is betting producers will be willing to pay so as to gain access to its mineral resources. Less certain is the cost to exploration and mine development in the longterm. The question remains: How to quantify whether investors and juniors will forego the opportunity to invest in Ecuador and its mineral riches given what some see as an expensive tax regime?