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.
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.
As the professional manufacturer of complete sets of mining machinery, such as Mobile crushers,Stone crusher plant, Henan Hongxing is always doing the best in products and service. As the professional manufacturer of complete sets of mining machinery, such as Mobile crushers,Stone crusher plant, Henan Hongxing is always doing the best in products and service.- Author Articles
- More From This AuthorHongxing Machinery always adheres to the management policy 'people-oriented, regulation-oriented', since its foundation. We are absorbed in every detail to insure the good quality. The company implements the...Mining equipment has really come a long way in the last few years. You need to make sure that you choose the highest quality of mining tools so that you can keep your costs down and improve productivity....According to the industry policy that our country will give significant support to the development of basic industry like energy, transportation and raw material, as the backbone of these basic industries,...Private machinery enterprise had won the market,Shaking concentrator machine, there is a ready cash to eat. But in the fierce competition in the market always maintain leading position, they must keep the...Sudan, short for The Republic of the Sudan. Sudan is located in the south-east of Africa. It's the biggest country in Africa. The industry in Sudan is backward. And the mining too. The main economy is...
- Related Articles
- Related ArticlesYou can recover your lost videos, photographs, e-mail, documents and archive files from external difficult drive or Mac based hard drive, USB drive, digital camera, iPod, mobile phone, MP3/MP4 player and SD...Men who slept their way through biology class may only have a passing understanding of how the human body works. For example, they may know that firmness develops when the male organ fills with blood, but they...Landscape Company Atlanta offers wide-ranging services for both, residential as well as commercial landscape, which include landscape maintenance, landscape design & installation, seasonal color-design...Garcinia Cambogia is only a small type associated with fruit which is grown both in Asia and The African country. It flavours a lot more like lime scale, tangerine and fruit. Precisely what are truly used in...This services for internet marketing and web designing, IT Staffing Firm on the results searching based results use the data for your selection marketing tip development and designing concept are popular in...
- Latest Articles
- Latest ArticlesNowadays, computer becomes a necessity in both work and life. People use it very often and it has already become a reliable space for people to store and save important documents, multimedia files and all...You can recover your lost videos, photographs, e-mail, documents and archive files from external difficult drive or Mac based hard drive, USB drive, digital camera, iPod, mobile phone, MP3/MP4 player and SD...Microsoft is one of the most reputed names in the IT world. Microsoft certification training is a course that provides special skills to the professionals in order to enable them to survive in this tough...Microsoft is one of the most reputed names in the IT world. Microsoft certification training is a course that provides special skills to the professionals in order to enable them to survive in this tough...Nowadays, even the most qualified IT professionals are not able to get good jobs due to the tough competition in this sector. Attaining a good job has also become difficult because of the rapidly changing...
