MAC: Mines and Communities

Ecuador's president ignores citizen opposition to mining

Published by MAC on 2013-04-15
Source: WW4 Report, Dow Jones

Ecuador's president, Rafael Correa, contiues turning an unhearing ear to mounting citizen concern about huge potential mining expansions. See: Correa's promotion of mining in Ecuador faces renewed opposition

Not only are parts of the ecologically highy-senstive montane rainforests in the Intag Valley under threat.

Following Correa's recent declaration that mining is a government priority, two foreign companies seem to be optimistic that royalties and  windfall tax "reforms" will enable them to grab  yet more tracts of land.

If Canada's Kinross Gold gets its way, it will control the largest gold mine in the country.

Ecuador: protests mount over mining, oil

WW4 Report

4 April 2013

Some 30 protesters crashed the opening of the sixth Expominas trade fair at the Quito Exhibition Center April 3, where Ecuador's government sought to win new investors for the mineral and oil sectors.

The protesters, mostly women, interrupted the event's inaugural speech with an alternative rendition of the song "Latinoamérica" by the Puerto Rican hip-hop outfit Calle 13, with lyrics referencing places in the country threatened by mining: "You cannot buy Intag, you cannot buy Mirador, you can't buy Kimsacocha, you can't buy my Ecuador." The activists wore t-shirts with the slogan: "Responsible mining, tall tale" (literally, cuento chino, Chinese tale). (Tegantai, April 3)

Correa makes new push for Intag Valley

The Mirador and Kimsacocha projects have been the focus of recent protests in Ecuador, while the gold and copper project in the montane rainforests of the Intag Valley (Imbabura province) has attracted attention from global ecologists due to the presence of the rare spectacled Andean bear in the threatened area.

Mining companies have sought to exploit the area for nearly 20 years, met with persistent community resistance; Canada's Ascendant Copper and Japan's Mitsubishi Group have both pulled out, but the government is still attempting to attract investment to develop the lease.

In a campaign coordinated by the international group Rainforest Rescue, some 3,000 hectares of threatened rainforest above the copper reserves have been bought with donations and transferred as communal forest to the local village of Junín.

However, President Rafael Correa is now seeking to exploit the area in a partnership between Ecuador's state-owned mining company ENAMI and the Chilean parastatal CODELCO.

The government pledges "socially and environmentally responsible mining" for the lease area, at a place called Llurimagua, and hopes to begin operations this year. Local communities reject the proposal, and Rainforest Rescue is calling for international pressure on President Correa. (Rainforest Rescue, April 1)

Amazon opened to Chinese capital

In another controversy, Ecuador has announced plans to auction off more than three million hectares of Amazonian rainforest to Chinese oil companies. On March 25, a group of Ecuadoran politicians pitched bidding contracts to representatives of companies including China Petrochemical and China National Offshore Oil at a Hilton hotel in central Beijing.

Previous meetings in Quito, Houston and Paris were each confronted with protests by indigenous groups and their supporters. "Ecuador is willing to establish a relationship of mutual benefit-a win-win relationship," said Ecuador's ambassador to China, Leonardo Arízaga, said in opening remarks.

California-based Amazon Watch says that seven indigenous groups who inhabit the lands now being opened to Chinese companies have not consented to the oil projects. "We demand that public and private oil companies across the world not participate in the bidding process that systematically violates the rights of seven indigenous nationalities by imposing oil projects in their ancestral territories," indigenous leaders said in an open letter distributed by Amazon Watch last year.

Ecuador: $1 Billion Investment From Kinross Awaiting Legislative Reforms

Dow Jones Newswires

5 April 2013

QUITO, Ecuador - Canadian gold-mining company Kinross Gold Corp. is awaiting government reforms in Ecuador to develop its Fruta del Norte project, which will require an investment of at least $1 billion to build the mine.

This investment will be used to build the mine and other production facilities for Fruta del Norte, said Maria Clara Herdoiza, the company's director of external affairs and corporate responsibility.

Fruta del Norte is the largest gold project in Ecuador, with proven and probable mineral reserves estimated at 6.7 million ounces of gold and 9.0 million ounces of silver. The company plans to invest $40 million this year in the project.

In December of 2011 Kinross and the government reached a non-binding agreement for the project. But the two parties have been negotiating since last year important changes for a final deal, following a request from the company.

Although negotiations have been tough and complex, Ms. Herdoiza said the company is optimistic that it will reach an agreement with the government in order to develop Fruta del Norte.

"We have made good progress on many issues. We have taken firm steps, but we are also awaiting reforms," said Ms. Herdoiza.

Offered reforms will include several topics, but the key point is related to the 70%-windfall tax on sales above a pre-negotiated base price.

"This is a key point not only for Kinross but also for all private companies operating or interested in Ecuador," said Ms. Herdoiza. "Our final agreement with the government will pave the way for the entire private sector."

Ecuador President Rafael Correa was reelected in February. He has said that during his new term, which will begin in May, his government will push for the development of large-scale mining projects.

Mr. Correa has offered to pass a reform to allow the windfall tax, which was created for the oil sector but is applicable for all non-renewable natural resources, be applied when investments are recovered.

Kinross and the government are negotiating the amount the company should pay as advanced royalties when the respective contracts are signed, as well as several economic and technical issues.

Since 2003 the company has invested about $300 million in the Andean country in several activities, including exploration works.

Santiago Yepez, president of the country's mining chamber, said Ecuador is looking for the opportunity to participate in Latin America's current mining boom.

"Without clear rules there won't be investments and the mining sector won't be developed," Mr. Yepez said.

Southern Copper Plans to Invest in Ecuador Pending Reforms

Dow Jones Newswires

3 April 2013

QUITO, Ecuador - Mining company Southern Copper Corp. is interested in investing in Ecuador to develop a copper deposit, but it is awaiting planned reforms to the current mining law.

Ramon Hip, a company executive in Ecuador, said Wednesday that Southern Cooper is planning to bid in Ecuador's next auction for mining concessions for exploring areas near the border with Peru.

"The investment will depend on the deposit," Mr. Hip said.

The company expects that the reforms to the mining law will allow the 70% windfall tax to be applied after investments are recovered.

Southern Copper is majority-owned by Grupo Mexico. It has operations in Mexico and Peru.

Ecuador doesn't have large-scale mines but the government is looking to develop the industry.

Last year the Ecuadorean government and Ecuacorriente, controlled by the China Railway Construction Corp. (601186.SH, 1186.HK) and the Tongling Nonferrous Metals Group Co. (000630.SZ), signed a 25-year contract to allow mining at the open-pit Mirador, the first large-scale mining contract for the Andean country.

Analysts expect reforms to the mining sector after President Rafael Correa begins his third term in office in May.

Mr. Correa was re-elected Feb 17. He has said mining activity will be a priority for his government.

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