Showing posts with label Ecuador. Show all posts
Showing posts with label Ecuador. Show all posts

Sunday, August 5, 2012

Ecuador says mining reform will pave way for contracts

Ecuador is preparing mining reforms that should pave the way for the signing of contracts with several investors, including Canada's Kinross, the South American country's top mining official said on Thursday.

Ecuador does not have a large-scale mining industry, but it has big copper, gold and silver deposits, and President Rafael Correa wants to attract investment to reduce the economy's dependence on oil exports.

In March, Correa signed the nation's first large-scale mining contract, under which Chinese-owned Ecuacorriente is due to invest $1.4-billion in the El Mirador copper project.

However, negotiations with Kinross Gold Corp over its $1.3-billion Fruta del Norte gold project are well behind schedule, in part because Organisation of the Petroleum Exporting Countries- (OPEC-) member Ecuador is trying to reap high benefits from the nascent sector.

A Kinross executive said last month that Ecuador's government had vowed to amend its mining law, which makes the signing of a contract more likely.

"The bill will be ready in the next few weeks so that the president can analyze it and send it to Congress if he thinks it's right," the minister for nonrenewable natural resources, Wilson Pastor, told reporters.

He said the bill will include two reforms, one that will delay the coming into force of a windfall tax until miners recover their investments and a second that will set a ceiling on mining royalties.

Under existing law, miners have to pay a minimum of 5% in royalties, but the law does not state a maximum.

"We'll set a rule in the mining law that will set a range for copper, gold and other minerals ... a minimum and a maximum," Pastor said, adding that the reform would bring more certainty to mining investors.

The ruling Alianza Pais political coalition does not have a majority in Congress, so opposition parties could block the bill in a bid to hurt Correa's government as the country heads to a presidential election scheduled for February next year.

"We're negotiating with Kinross intensively. Our timeline calls for negotiations to end in August, and a contract would be signed in September or October," Pastor said.

The Toronto-listed company signed a tentative agreement with Ecuador in December but later said it wanted to renegotiate the deal in a bid to obtain a more favorable package of taxes and royalties.

The government has said the agreements with Ecuacorriente and Kinross would be a model for future deals, which should allow Ecuador to develop a large mining industry.

Ecuador also plans to negotiate contracts with International Minerals over its Rio Blanco gold/silver project, with Ecuacorriente over its Panantza-San Carlos copper deposit, and with IAMGold, which plans to develop the Quimsacocha gold/copper/silver mine.

IAMGold has agreed to sell Quimsacocha to INV Metals in exchange for a stake in the company.

Those three are in relatively advanced stages of exploration, but junior miners have about 15 other exploration projects under way.

Source: Reuters

Thursday, April 26, 2012

Need a mining job? Head to Ecuador

Ecuador needs at least 300 mining engineers and geologists in the near future to be able to deliver on its recent mining contracts, but only about 40 such professionals graduate annually from six universities that offer those programs, according to the agency that regulates Ecuador’s mining industry.

The Agencia de Regulación y Control Minero (ARCOM) says some of the reasons for the shortage of mining graduates include the limited number of academic programs offered in this area, the high cost to universities which offer them, and an overall lack of student interest in these professions.

Jaime Jarrin, ARCOR’s executive director, added yet another reason for the shortage is that mining engineers and geologists are also needed by Ecuador’s highway construction, petroleum extraction and hydroelectricity industries. Additionally, the country lacks other professionals with knowledge of the mining industry, such as economists and lawyers.

However, because of the mining sector’s increasing demand for skilled labour, and since the employment rate is high, these programs are becoming more popular with students.

“All of our graduates have jobs,” Carlos Ortiz, director of the Engineering Mining School at the Universidad Central en Quito, was quoted as telling BBC News earlier this month. “There isn’t a single one that is unemployed due to a lack of options in mining.”

Last month, Ecuador signed a contract with the Chinese company Ecuacorriente to develop the country’s fist copper mining megaproject. In addition, four more contracts are in the pipeline to be signed this year: Kinross Gold Corp’s Fruta del Norte gold mine; International Minerals’ gold and silver property, Rio Blanco; IAMGOLD’s Quimsacocha gold mine; and a second deal with Ecuacorriente around the major copper project Panantza-San Carlos.

In this context, Ecuador may have to import skilled mining labour to meet its mining obligations. According to Ecuadorian law, 80% of mining workers must be nationals, leaving 20 per of the jobs to be filled by foreigners.

“Our country is experiencing a new era in mining,” noted ARCOR’s Jarrin. “It is a reality that we need mining experts and our deficit in this area is one we must solve with the help of government, our universities and the private sector.”

Thursday, March 22, 2012

Mining plans in Ecuador face indigenous backlash

Mediaworks reports hundreds of indigenous people in Ecuador opposed to planned mining projects are marching towards the country’s capital of Quito. There have already been clashes with police and criminal charges laid.

The marchers, led by the Confederation of Indigenous Nationalities, say the 10% royalties on mining that contracts specify should benefit local communities will not be enough to compensate for harm done to Amazon forests and important watersheds:

“The activists point to the damage oil drilling has done to Ecuador’s northern jungles, resulting in last year’s $US17.8 billion judgment against Chevron Corp.”

Ecuador’s government and Canada’s Kinross Gold could sign an agreement in June to develop the long-delayed “Fruta del Norte” gold project, the country’s largest mine.

On March 2, Chinese-owned mining company Ecuacorriente signed a contract to invest US$1.4 billion over five years for extracting copper in country’s southern Amazon.

The deal was the first of its kind in Ecuador, which has no large-scale mining to speak of.

The government of leftist President Rafael Correa sees mining as a way to counter-balance the impact on the economy of oil, which accounts for more than 50% of the country’s exports.

Contracts for several other high-profile deposits, requiring a total investment of more than US$3 billion, could be signed by the end of the first quarter once the issue of royalty payments is resolved.

Projects up for negotiations include China’s Tongling Nonferrous Metals Group for the Mirador and San Carlos copper deposits, Canada’s International Minerals (TSE:IMZ) for the Rio Blanco gold mine and IAMGold’s (TSE:IMG) Quimsacocha gold-copper-silver mine.

Thursday, March 8, 2012

Procurement system hampering metallurgical sector

The special law for procurement that applies to strategic sectors in Ecuador is hampering the metallurgical industry's participation in local project development, the director of national metalworking industries association Fedimetal, Guillermo Pavón, told

"This law establishes that companies define how they will carry out contracting or purchasing according to internal regulations," Pavón said.

Companies from the power generation and transmission, hydrocarbons, roads and mining sectors - where the metal-mechanics industry has the most opportunities - can use the special regulations and make purchases or contract services according to their own criteria.

"The national [domestic] industry doesn't necessarily get priority and in general they sign contracts with foreign companies," Pavón said.

PUBLIC POLICY

On the other side are companies that do not benefit from the special law and instead carry out purchasing and contracting through the public procurement portal, which offers the domestic industry more opportunity to participate.

"The issue is that although a lot of investments are part of this system, it does not cover the biggest investments that are related to the strategic sectors," Pavón said.

However, Ecuador's government recently announced that it will facilitate the participation of the metallurgical industry in projects in the strategic sectors.

"Everything that can be done locally, will be done," foreign minister Ricardo Patiño was quoted as saying by local press. Patiño added that the metallurgical industry has to participate in local projects and that only the products that are not produced in the country will be imported.

The major sector companies are Andec, Adelca and Novacero, which together produce 480,000t/y. Ecuador consumes 1.2Mt/y of long and flat steel.

Tuesday, March 6, 2012

Ecuador signs first large-scale mining contract

Ecuador's President Rafael Correa on Tuesday signed the country's first ever large-scale mining contract, which calls for Chinese-owned Ecuacorriente to invest $1.4 billion in the El Mirador copper project.

Ecuador has no mining industry to speak of and Correa, a US trained economist, is eager to attract investment to tap the country's big copper, gold and silver deposits and diversify the economy from its dependency on oil exports.

Correa is trying to reap lofty benefits from miners and negotiations with Ecuacorriente and Canada's Kinross, which plans to develop the Fruta del Norte gold project, have taken much longer than initially expected.

"Comrades, today marks the beginning of a new era in Ecuador ... this will be the first large-scale exploitation project," he said adding that his government is set to receive high revenues from El Mirador, which it would spend on roads, schools and hospitals ahead of the 2013 election.

Including royalties, value-added taxes, income tax and other duties, Ecuacorriente will pay the state about 52% of its revenue.

The government says with El Mirador, Ecuador will become the state with the highest benefits from a mining project.

"The contract marks ... a political win for Correa, whose strategy has been to push to the absolute limit the amount of money that he can extract from the sector while still ensuring that several major foreign-owned projects move forward," Eurasia Group analyst Risa Grais-Targow said in a statement.

El Mirador, an open-pit project in the southern Zamora Chinchipe region, will pay royalties of between 5 percent and 8 percent, depending on copper prices, and should start production at the end of 2014. The government estimates there are 4,738 million pounds (2.15 million tonnes) tonnes of copper reserves at the site.

Grais-Targow said Ecuacorriente may have been more willing to accept the tough terms demanded by the OPEC-member country because it is a state-owned company and because China has become a key source of financing for the Correa government.

Ecuador signed a $2 billion credit deal with China in June and in October it signed a pact for a $571 million loan with a Chinese bank, which took total debt commitments to China to around $7.3 billion, including loans, advance payments for oil sales, and energy project financing.

MORE CONTRACTS?

Toronto-listed Kinross signed a tentative agreement in December to invest $1.2 billion, according to the government. But last month Kinross said it wanted to re-negotiate the deal in a bid to obtain more favorable economic terms.

The government has warned that negotiations could fall through because Kinross was making demands that were "over the top."

Analysts say the tough terms of the deals and the risks of doing business in a socialist country could deter miners from investing in Ecuador.

Ecuador is set to negotiate contracts this year with International Minerals over its Rio Blanco gold-silver project, with Ecuacorriente over its Panantza-San Carlos copper deposit, and with IAMGOLD which plans to develop the Quimsacocha gold-copper-silver mine.

Source: Reuters

Sunday, March 4, 2012

Ecuador to sign $1.4 billion copper contract but Kinross gold project stalled

 

Chinese-owned mining company Ecuacorriente has signed a contract to invest $1.4 billion over five years for extracting copper in Ecuador’s southern Amazon, reports local newspaper La Republica.

Nonrenewable Resource Minister Wilson Pastor touts Thursday’s agreement as the first in a series of large-scale mining deals and says production could begin as early as 2013.

The contract is the first of its kind in Ecuador, which has no mining industry to speak of. However, President Rafael Correa is keen to draw interest from big miners to start exploiting the country’s copper, gold and silver deposits.

“With this project Ecuador will be the world leader in terms of how much revenue it will be obtaining,” Pastor told reporters referring to the contract that Ecuacorriente is scheduled to sign on Monday.

In December last year, Toronto-listed Kinross signed a tentative agreement to invest $1.2 billion in the country, according to the Ecuadorian government. However, Kinross now wants to re-negotiate the deal, which has hindered the negotiations

SOURCE: Cecilia Jamasmie - Mining.com

Thursday, March 1, 2012

Ecuador sees Ecuacorriente copper contract next week

Ecuador is set to sign a contract next week that would allow Ecuacorriente to develop El Mirador copper mine, where the Chinese-owned mining company plans to invest $1.4 billion in the next five years, energy minister Wilson Pastor said on Thursday.

Ecuador has no mining industry to speak of and leftist President Rafael Correa is eager to attract investment to tap the country's big copper, gold and silver deposits and diversify the economy from its dependency on oil exports.

However, he is trying to reap high benefits from miners and negotiations with Ecuacorriente and Canada's Kinross, which plans to develop the Fruta del Norte gold project, are taking much longer than initially expected.

"With this project Ecuador will be the world leader in terms of how much revenue it will be obtaining," Pastor told reporters referring to the contract that Ecuacorriente is scheduled to sign on Monday.

"They have agreed to pay royalties in advance. Before the project starts they will give $100-million to fund social development projects in areas around the mine," he said, adding that once production starts Ecuacorriente will pay between 5% and 8% in royalties depending on copper prices.

Including royalties, value-added taxes, income tax and other duties, Ecuacorriente will paying the state about 52%- of its revenue, Pastor said, adding that the investment includes the construction of a port from which the copper would be shipped to China.

Meanwhile, Toronto-listed Kinross signed a tentative agreement in December in which the company would invest $1.2-billion, according to the government. However, last month Kinross said it wanted to re-negotiate the deal in a bid to obtain more favorable economic terms.

Pastor warned that negotiations could fall through because Kinross was making demands that were "over the top."

The government says the agreements will be a template for future mining deals that should let Ecuador develop a large mining industry in which the state will have a greater degree of control and pocket most of the profits.

Analysts say the tough terms of the deals and the risks of doing business in a socialist country could deter miners from investing in Ecuador.

Ecuador is set to negotiate contracts this year with International Minerals over its Rio Blanco gold-silver project, with Ecuacorriente over its Panantza-San Carlos copper deposit, and with IAMGold which plans to develop the Quimsacocha gold-copper-silver mine.

Edited by: Reuters