CJR, very good point about Chavez using Peru and Equador as a sort of proving ground and then following suit. Here is an article from Nov 10 of Correa talking about the mining sector:

By Alonso Soto

QUITO, Nov 10 (Reuters) - Ecuadorean President Rafael Correa said he will propose this week a mining bill to overhaul the nascent sector, and warned his allies in the legislature not to make deep changes to the legislation.

Correa, a leftist former economy minister, has said he wants to jump-start mining of precious metals from large deposits to diversify the oil-dependent economy and share its revenues with the poor majority.

"If there are deep changes to the law, I will veto it and put it up for a popular referendum," Correa said during his weekly media address on Saturday. "The government's political decision is to develop the mining sector."

Correa, who enjoys a majority in the legislature, has clashed with more radical factions inside his Alianza Pais party that say large-scale mining will hurt the country's pristine environment and indigenous communities in the jungle.

The legislature power-struggle over the bill will be key for foreign companies deciding whether to do business in Ecuador, which holds huge deposits of gold, copper and silver.

Mining development in Ecuador should raise revenue for the government at a time when its income from oil sales is likely to be lower than in previous years.

Deputy Mining Minister Jose Serrano told Reuters that under the draft law companies could opt to exploit minerals under a service contract with the government, although that would not be obligatory. Companies had lobbied for such flexibility.

Serrano also said the law would levy "at least" 5 percent royalty on sales but would allow companies to deduct some operational costs, such as refining and transport. At times during the drafting of the law, companies had feared a higher levy based on gross production.

The government could introduce the bill as soon as later on Monday and expected it to be approved by early 2009.

Ecuador will also apply a windfall tax to what it considers extraordinary revenue due to high metal prices, he added.

"The 'at least' 5 percent royalty and service contracts is a bit ambiguous and adds an element of uncertainty and risk," said Michael Gray, an analyst with Genuity Capital Markets in Vancouver.

"This means that the biggest companies around the world will probably sit on the sidelines and wait for clarity in Ecuador before investing."

Some of world's top miners, such as Chile's Codelco and Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), are eyeing massive copper projects in southern Ecuador. Other world-class gold and silver plays could lure large investors, analysts say.

If approved, the law will lift a government ban on mining activity approved in April that hurt the operations of dozens of Canadian companies, such as Corriente Resources (CTQ.TO: Quote, Profile, Research, Stock Buzz) and Iamgold (IMG.TO: Quote, Profile, Research, Stock Buzz).

The widely popular Correa warned environmentalists and Indian groups who have threatened road blockades and massive protests to reject the new bill.

"These groups can do whatever they want peacefully. But, if they block roads and act against private property, we will act firmly," Correa said. "It will be irresponsible to sit on these world-class gold, copper and silver reserves and leave it underground."

Influential Indian groups have threatened massive marches to reject the new law they say it benefits foreign companies to the detriment of the environment. (Editing by Walter Bagley)