Ecuador set to revoke thousands of mining concessions

Ecuador's President Rafael Correa answers questions during a meeting
with foreign press at the government palace in Quito, Thursday, April 17, 2008.

QUITO
Petroleumworld.com, April 18, 2008

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, have'nt 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.

Story from AFP
AFP 17 2337 GMT 04 08

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