Ecuador Looks To Sweeten Deal For Miners As Locals Promise Opposition

Ecuador Looks to Sweeten Deal for Miners as Locals Promise Opposition

Last week's re-election of Ecuador's president, Rafael Correa, appears to have put the country on a path towards improving investment conditions for miners who want to extract the country's copper, gold and silver. The world's largest copper producer, Chile's Codelco, is among the companies that has set its sights on the country. But indigenous and environmental groups that have protested mining projects in the past are likely to obstruct future projects.

On February 13, Codelco received approval to start exploration at the Junin copper deposit in the Toisan mountain range, BNamericas reported. The company plans to start drilling in the second half of this year.

Junin has a checkered past. BNamericas notes that in the 1990s, Japan's Mitsubishi (TSE:8058) carried out initial exploration at the site; the project was then acquired by Canada's Ascendant Copper, which was later renamed Copper Mesa Mining (OTC Pink:CMMVF). A group opposed to the mining activities took 57 Copper Mesa employees hostage for a week in 2006 on the grounds that the mining concession was in a nature preserve. Protesters have since accused the company of employing armed men to attack protesters, according to a Toronto Star report. The Ontario Court of Appeals rejected that claim in 2011. Meanwhile, Copper Mesa's licenses were cancelled in 2008 after a government moratorium on mining activities.

Since then, in an effort to attract miners and diversify the country's economy, Correa has said he plans to reform the mining law so that companies are not taxed before they regain their investments.

“I don't like mining, and open-pit is even worse, but it's impossible to think of modern life without mining and it would be irresponsible not to use those resources,” Correa said last week, the Gulf Times reported. “We cannot be beggars sitting in front of a bag of gold,” Correa was then cited by The Australian as saying.