New Mining Law Goes to Ecuador’s Legislature

Ecuador’s President Rafael Correa sent a new mining law to the nation’s legislature in mid-November. As reported by Reuters, the proposed legislation includes some clauses regarding royalties and contracts that most likely will not sit well with companies developing mining projects. Royalties are to be not less than 5% and will be negotiated on a project-by-project basis, and new mining extraction contracts also will be negotiated on a projectby- project basis. Companies could opt for service contracts, in which the state pays a fee for a company to extract the mineral. Under such contacts, the state would retain control of the extracted minerals.

Mining companies will have up to eight years to explore for minerals in concessions. Another two years will be granted to evaluate the economic viability of the deposit before requesting a mining permit. There will be no limits on the number of concessions a company can hold during exploration.

Mining companies will have to issue detailed environmental impact studies to get exploration and extraction permits. Local communities will not hold veto power to shut down mining projects.

The new law is expected to be approved in early January. Reuters reported that Correa had warned the more radical factions inside his Alianza Pais party not to make deep changes to the bill or he would veto it and put it up for a popular referendum. Influential Indian groups have threatened to reject a law they say will push forward an industry that will damage the environment of ancestral lands. However, “Analysts say the biggest threat to the industry continues to be the government’s lack of clarity in mining regulation and its known arm-twisting tactics with foreign companies to get more benefits to the state in negotiations,” according to Reuters.

As featured in Womp 08 Vol 10 - www.womp-int.com