QUITO (Dow Jones)--Ecuador will formally begin mining concession negotiations Thursday with local units of two Canadian companies - Corriente Resources Inc. (ETQ) andAurelian Resources Inc. (ARU.T), Mining and Oil Minister Galo Chiriboga said Wednesday.

State royalties, environmental and technical controls and consultations with local communities will be part of the talks.

The government of President Rafael Correa has announced plans to review and renegotiate 4,112 mining concessions that cover 2.8 million hectares in the country.

Correa and his cabinet have also announced reforms to Ecuador's mining law through the Constituent Assembly, which last month approved a tax reform that includes a new 70% windfall-revenue tax for exploration and exploitation of nonrenewable resources.

The new tax will apply to exploration or exploitation by companies operating in Ecuador when prices exceed the level set in their contracts.

Cesar Espinosa, president of the Ecuadorian Chamber of Mining, said Wednesday that the negotiations "will be positive because President Rafael Correa has recognized the importance of mining for the country."

According Espinosa, next week the government will begin meetings with various officials to prepare a new law for the sector, which will be send to the assembly by May.

Espinosa said the new law will emerge "from a debate among all those involved in order to incorporate the best global mining practices. Modern mining is compatible with environmental and social concerns," he said.

The Constituent Assembly is a special body with the primary task of rewriting the constitution. Allies of left-leaning Correa have a majority in the assembly.

Last October, Correa said that he will allow open-pit mining and oil development in spite of any negative environmental impacts from these projects if they generate revenues for government spending.

EcuaCorriente SA, a subsidiary of Canada's Corriente Resources, has two projects: Mirador and Panantza-San Carlos.

Aurelian Resources has the Fruta del Norte gold-silver project.

-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653; mercedes.alvaro@dowjones.com

(END) Dow Jones Newswires

01-09-08 1500ET

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