May 16 (Reuters) – Ecuador’s government on Thursday presented a mining bill to Congress that should pave the way for the signing of contracts with several investors, including Canada’s Kinross Gold Corp.
Ecuador does not have a large-scale mining industry, but the country is largely unexplored and could potentially have big copper, gold and silver deposits. Socialist President Rafael Correa, who won a sweeping re-election victory in February, is eager to attract investment to reduce the economy’s dependence on oil exports.
“We’ve sent a bill labeled as urgent … it contains the reforms to the mining law. Our mining law is very good, but we made some mistakes and it was too strong in some aspects and there were not as many investments as we expected,” Correa told reporters.
Negotiations with Kinross Gold over its $1.3 billion Fruta del Norte gold project are well behind schedule, in part because OPEC-member Ecuador is trying to reap high benefits from the nascent sector.
“Investors asked for some reasonable things and that’s why we’re changing the law,” said Correa. Lawmakers are likely to pass the bill promptly, since the ruling Alianza Pais political party has nearly three-quarters of the seats in Congress.
Last year the government said the bill would 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 percent in royalties, but the law does not state a maximum.
After his re-election victory in February, Correa told Reuters he expected to sign a contract with Kinross within six months.
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