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Opinion

Photo: Constituent Assembly
Photo caption: An anti-mining leader visited the Constituent Assembly last January 16. Acosta (behind) welcomed them.

Washington D.C., January 29, 2008 – Two weeks ago, during his annual address to the nation, President Rafael Correa affirmed his support for Constituent Assembly speaker Alberto Acosta. He even went so far as to deny that there are separate pro-Acosta and pro-Correa factions within the president’s political party, Alianza Pais. Today, it is no secret that the Correa-Acosta relationship will crumble shortly due to dissagrements over mining.

President Correa has stated several times that he welcomes responsible mining that is respectful to the environment, affected communities, the state, and workers. But some Assembly members – known as “Acostistas” – led by Assembly speaker and former green activist Alberto Acosta, would like to see Ecuador become a mining-free country.

Besides the Acostistas, the MPD socialist political party – which supported Correa during his presidential campaign – has formally requested that the Assembly declare Ecuador free of large-scale mining operations. Moreover, on Sunday [January 27] the Conaie, an indigenous activist organization and former Correa supporter, threatened a major strike if the president does not halt oil and mining exploitation. Read article

This is no easy situation for Correa, a pragmatic U.S.-educated economist who wants – and needs – mining industry revenue to finance his ambitious social programs whose costs more than doubled last year’s. During his weekly radio show in early December, the Ecuadorian president said, “…what it is immoral is missing that great mining opportunity to develop this country.” Read EMN’s article

However, last Saturday, to the horror of investors, the president made what appeared to be flip-flop during his radio show. “Do you know how much the state receives in mining or oil exploitation royalties? Do you know how much do they pay according to this harmful law? Zero,” he said, referring to the current mining law drafted in consultation with the World Bank. With that, he urged the Assembly to pass a new mining law. See Presidential Press Release

Correa’s mining criticism came one day after MMP minister Galo Chiriboga announced the revocation of 587 mining concessions, which apply to firms that haven’t paid their annual per-hectare fees ranging from $1 to $16. According to the current law, all mining projects in Ecuador have until March 31st to pay their entire annual concession fees in advance. After six months [by September], companies whose fees are in arrears will face permanent revocation of their concessions at the hands of the MMP’s regional authorities, which collect concession fees.

In other words, the MMP is finally enforcing the law. What is curious about the MMP announcement is that the ministry only named one firm by name: Ascendant Copper, whose Junin project got its Golden I and II concessions revoked.

Why did Chiriboga only mention Ascendant when 587 concessions faced revocation? The only sensible answer is that Ascendant’s fierce NGO opposition, Decoin and Mining Watch, somehow played a sinister role. Mining Watch, you may recall, financed Decoin activist Carlos Zorrilla’s trip to Canada to sue Ascendant. So it’s becoming clearer that Mining Watch, which opposes mining in Ecuador and also opposed to Corriente’s operations, holds great sway over parties within the MMP. Sources claim that Fundacion Ecologica, Mining Watch’s ally in Ecuador, is led by Alberto Acosta’s wife Anna Maria Varea. They put the blame squarely on her. Read Mining Watch article

On the other hand, revoking concessions and making noise in the media might be a Correa administration strategy to protect the mining industry from more aggresive opposition. It could be a way of diverting the attention of green NGOs while the administration enters solid agreements with serious international mining firms, including ones whose concessions are threatened with recovation. As of last week, the MMP kept holding meetings with Aurelian Resources and Corriente Resources to study the terms of exploitation concessions.

It is well known that the Correa-Chiriboga duet understands that international mining firms want to invest in Ecuador using the best environmentally friendly techniques, that they are developing community projects, and that their presence benefits the country. These firms are eager to negotiate royalties with the country, and even a manageable windfall tax if necessary. But Acostistas, their socialist MPD followers and Conaie’s sympatizers reject all mining projects, especially if they are large-scale operations.

The Correa-Chiriboga strategy may also prevent the Assembly from issuing a mandate to ban all mining activity if concessions lack environmental impact studies until the new law is approved, according to a draft mining law EMN has accessed. The Assembly mandate also would create a new State Mining Corporation to control mining activity, and suspend all new mining concessions, as Correa announced two weeks ago.

If Correa’s idea – if indeed his – succeeds, the aggressive green opposition will subside as a result of him throwing them a bone in the form of his threat to revoke hundreds of mining concessions. Then the MMP could resume its pro-mining agenda by negotiating directly with Aurelian, Corriente, Ascendant and all the serious firms. This would be one reason that investors on the Toronto Stock Exchange could remain optimistic, though firms such as these suffered high sales volumes last Friday.

The only certain political thing in Ecuador, a Canadian investor once told EMN, is that there is political uncertainty. This ambiguity does appear a little coincidental, and that supports the theory of the administration deliberately sending mixed signals to create a distraction. If true, it would be an intelligent move by Correa to advance large-scale mining and not miss the mining opportunity that can only benefit his country. After all, why would the MMP develop a series of workshops around the country, bring in Canadian and Peruvian experts to deal with all industry stakeholders, and negotiate at all with large-scale mining firms?