New Mining Law to be Approved After Referendum

Ecuador’s new mining law will be approved in the next few weeks, right after the September 28th constitutional referendum, which will also give the green light to create the nation’s Assembly, said MMP minister Galo Chiriboga in a meeting with Canada’s International Trade Minister Michael Fortier yesterday, in Quito.  The MMP’s 110-page draft, available on the ministry’s website, reveals that the Ecuadorian government favors open pit mining, creates a new royalty of 5 percent maximum, and leaves open a door to apply the feared 70 WFT. 

Correa Takes Heat for Mining Stance

Internationally, President Rafael Correa is seen as a leftist with nationalistic sentiments that endanger natural resources investments.  But within his country Correa is in a battle against the extreme left.  Correa’s disagreements with his one-time environmentalist friends and campaign supporters were more obvious during the Constituent Assembly operations, the legislative body that approved the infamous mining mandate.  Correa continues welcoming responsible mining operations in Ecuador, and offered to publish the new mining law at the end of this month.

Kinross Bid to Aurelian Elicits Mixed Reations

Kinross Gold Corporation’s $1.2 billion takeover bid for Aurelian Resources has elicited mixed reactions among investors alike.  While Aurelian shareholders complain that the offer is too lowball, Kinross stocks fell 10 percent, the day the deal was announced.  A mining analyst speculates that the expected 70 percent windfall tax may be the reason for the bid’s unorthodox timimg, and says that the percentage is very severe for the industry. 

Advertorial: Ecuador’s Rio Blanco Shines at 2.2 m 30.8 g/t Gold

International Minerals’ Rio Blanco project reported high-grade drill results, including 2.2 meters at 30.8 grams per ton gold from veins within the western Bolivar Zone, 50 kilometers west of Cuenca, on the western flank of the Western Cordillera, in Ecuador. “The Bolivar West drill results were very positive and show that Rio Blanco has upside in adding high-grade gold mineralization,” said a spokesperson for International Minerals (TSX & SWX: IMZ).  Exploration drilling was halted after the April 18th mining mandate issued by the Constituent Assembly.  The mining mandate, nonetheless, is a temporary one and it will be superceded by the new mining law when it is approved.

Q&A with José Serrano, Ecuador’s Deputy Minister of Mines

Silvia Santacruz of Ecuador Mining News met with Ecuador’s Deputy Minister of Mines, José Serrano, during the LatAm Mining Congress held in Miami last June 17th.  In this EMN exclusive, Serrano revealed that the mining law will be ready at the end of August, and guarantees that the coming legal framework will bring stability to the state and international investors.  He also says that the windfall tax will be applied to the industry, and that the reference price will be established according to a project’s characteristics.

EMN Highlights from 2008 NYSSA Conference

The NYSSA Metals & Mining Conference in New York, in early June, gathered mining executives from around the world who spoke about their projects, their resources or reserves, financial statements, and political stability in host countries.  The trend among most of the featured companies was similar.  Projects with the richest deposits were in risky countries, and low-grade projects were in the friendliest jurisdictions.  International Minerals was the only company with projects in Ecuador that participated in the conference.

Q&A with Victor Flores, Senior Mining Analyst HSBC, New York

In an exclusive interview, EMN talks with Senior Mining Analyst Victor Flores, the inaugural speaker at the New York Stock Securities Analysts (NYSSA) Eighth Mining and Metals Conference.  Flores explains how Ecuador’s April mandate affects investor confidence, and how mining firms may feel they must move on to develop projects in other countries.  He warns that mining projects in Ecuador can be delayed for years and compares the country’s political risk with that of the Congo.   

Silvia’s Ecuador Trip Diary: Entry Two

In this second of two installments, EMN Writer-Editor Silvia Santacruz shares the details of her pro-mining mission to Ecuador.  She offers a play-by-play of EMN’s pro-mining conference in Quito, including speeches made by various mining stakeholders who responded to EMN’s call to further unite in support of mining.  Included are her observations, photos, quotes from speakers, links to news clips, and videos.

Cementing Ecuador’s Poverty by Decree

Ecuador’s Constituent Assembly issued a decree halting all medium- to large-scale mining operations in the country for the next six months.  During her pro-mining mission to Ecuador, EMN Writer-Editor Silvia Santacruz witnessed how much a single junior exploration company can benefit the economy of impoverished communities such as Pucará, three hours from Cuenca.  While international investors lose confidence, and mining companies redefine their strategies and seek friendlier mining frontiers, the Pucarasenses simply wait.  

EMN Exclusive Article in Industrias Magazine

Industrias Magazine, a monthly publication of the Guayaquil Chamber of Industry, published in its March issue an EMN feature article, “Let’s Take Advantage of the Mining Opportunity.”  Authored by EMN Writer-Editor Silvia Santacruz, the five-page exclusive article stresses the importance of international investor confidence.  Specific article topics include the need for property rights and clear regulation, the threat posed by a windfall tax, and two remarkable LatAm examples: Chile and Peru.  “Ecuador can move from a \'Banana Republic,’ cocoa producer, flower grower, and oil producer to a prosperous mining one,” said Santacruz.  Spanish only  Link to Chamber layout

Silvia’s Ecuador Trip Diary: Entry One

In this first of a two-part series, EMN’s Writer-Editor Silvia Santacruz reveals the details of her pro-mining mission to Ecuador.  Silvia’s first stop was Montecristi, site of the Constituent Assembly.  There, she shares the results of her Investor’s Concerns Survey with key Assembly members.  Later, in Quito, Silvia begins organizing a pro-mining event with the help of stakeholders before taping a 30-minute TV news interview in Guayaquil.  Go to the interview [Spanish only]

Opinion:  Could Correa ‘Flip-Flop’ Create a Back Door for Mining?

Ecuadorian President Correa made what appeared to be flip-flop during his radio show, last Saturday.  He argued that the mining industry does not pay royalties, and the only obligation per-hectare fees ranging from $1 to $16, are sometimes unpaid.  Based on late fees, MMP minister Galo Chiriboga announced the revocation of 587 mining concessions, last Friday.  The Correa administration move may be deliberately sending mixed signals to create a distraction among anti-mining activists.

Windfall Tax Approved, Mining Law on Horizon

While it is unclear whether the 70 percent windfall tax on non-renewable resource extraction will include mining companies, the MMP Minister reiterated President Correa’s support for the industry and announced a dialogue with firms regarding the drafting of a new mining law.  If the windfall tax applies to mining firms, Ecuador will join Mongolia in discouraging international investors from keeping their holdings in the Andean country.  A mining analyst and an investor discuss their insights with EMN regarding this issue.

Details of Proposed Windfall Tax Unfolding

A newswire’s report regarding a 70 percent windfall tax on mining firms operating in Ecuador stunned the industry, precipitating a selloff in shares of junior exploration companies investing there.  As of today, Saturday, details of the tax law were still unfolding but EMN’s research and discussions with an industry group reveal some aspects of the tax law that investors and firms should know about.

El Comercio Prints EMN Viewpoint

Ecuador’s most influential publication, the Quito-based El Comercio daily newspaper, printed an opinion letter authored by EMN Writer-Editor Silvia Santacruz.  The piece outlines the positive effects that large-scale mining will have on Ecuador and argues for the Constituent Assembly’s enactment of industry-friendly regulations.  It also warns against extremist NGO agitation, calling for sensible regulation of these organizations’ behavior.

Some green NGOs have an inexplicable dark side: they oppose large private companies’ projects in developing countries regardless of their environmentally-friendly standards.  In turn NGOs prevent generous social responsibility programs from helping the poor, while NGO staff work comfortably from the most developed countries and spread misinformation campaigns on the Internet, capturing millions of dollars in donations.