Ecuador Undergoes Mining Makeover

Written by Cyril Mychalejko

Tuesday, 22 April 2008 15:08

Anti-Mining Protest

Ecuador's constitutional assembly passed a mining mandate last week that cancelled a majority of the country's mining concessions, suspended remaining projects, and imposed a moratorium on awarding new concessions while giving the government a six month deadline to re-write the country's mining legislation.

"What's at stake here is to define the future of large-scale metallic mining in Ecuador," said the assembly's president Alberto Acosta, in a speech before the mandate was passed 95 to 1 (with 25 abstentions).

International mining companies operating in Ecuador, many of which are Canadian (such as Ascendant Copper, Aurelian Resources Inc., Dynasty Metals & Mining Inc, and IamGold Corp. ), have no legal recourse to challenge the ruling. This will be the first time the Ecuadorian government will change its mining laws since the early 1990's, when the World Bank "assisted" Ecuador in deregulating the industry at the expense of protecting the environment and upholding the rights of local communities to self-determination.

"The accepted proposal is fraught with negative actions that make Ecuador inhospitable to mining investment," stated Haywood Securities analyst Eric Zaunscherb in a note to clients.

Dynasty spokesman William McCartney told Bloomberg News that the decision was "devastating" and cost his company "millions of dollars of market capitalization."

Patrick Anderson, Aurelian's chief executive, suggested to Reuters that Ecuadorian President Rafael Correa's administration was "not fully aware" of the benefits of mining and that his party has been hijacked by extremists.

"It's an extremely left-wing faction of the president's party who have an anti-mining agenda," said Anderson.

There are also plans to create a state-owned mining company and to increase the percentage of mining revenues owed to the government. The mandate also bans all mining projects that may impact water resources and that could threaten publicly protected areas.

"The current dilemma is not to say yes or no to mining, but rather to seek for responsible, economical, social and environmental mining," said Correa.

Carlos Zorrilla, executive director of Defensa y Conservación Ecológica de Intag (DECOIN), calls the assembly's decision a victory of "right over might." Zorrilla, who was forced to temporarily go into hiding because of his anti-mining and environmental activism against Ascendant Copper's controversial Junin project, also believes this could "lead to an Ecuador free of large and medium scale metal mining in the near future."

Cyril Mychalejko is an editor at www.UpsideDownWorld.org.