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 ArticlesIt’s no secret that the male organ changes as a man gets older, but how to control these changes and maintain optimum male organ health is often something of a mystery. Unfortunately, not all boys are taught...It’s no secret that the male organ changes as a man gets older, but how to control these changes and maintain optimum male organ health is often something of a mystery. Unfortunately, not all boys are taught...A Mother or Father will find themselves upon death in a high position in Paradise, and they will ask Allah, "By Allah, how can I be in a position such as this, when I feel I do not deserve such a position?"...From the first glance the River Seine in Paris may just look like a plain river which runs through Paris, but it happens to be much more than just that, having turned into a major tourist attraction and a...In India, since 18th century when banks establishment started to now there are innumerous numbers of banks. Different banks are categorized into different sectors. Some banks are working on the private sector...
- Latest Articles
- Latest Articlesintroduction to Oracle 9i SQL® 1Z0-007 Exam Topics Displaying Data from Multiple Tables Write SELECT statements to access data from more than one table using equality and nonequality joins View data that...A Question from Yahoo Answer: I want to create a photo slide show, but I do not want to do a normal photo slideshow. Because these photo slideshows are boring! Who can tell me how to make a wonderful photo...It’s no secret that the male organ changes as a man gets older, but how to control these changes and maintain optimum male organ health is often something of a mystery. Unfortunately, not all boys are taught...According to popular belief, the average man is ready at a moment’s notice to spring into action – even the slightest of breezes may be enough to set off a sensual response. However, while few men will...Its summer and I have number of option available to visit. However, am short on budget. Therefore, I will try to get the list of top sites that are most suitable, safe and comfortable for me to visit and as...
