Reuters reported that Ecuador expects to sign a final deal with mining company EcuaCorriente at the end of this month and another with Canada's Kinross Gold Corporation in February.
Mr Wilson Pastor natural resources minister said that the two deals would involve total investments of some USD 2.8 billion about USD 1.2 billion by Kinross and more than USD 1.6 billion from EcuaCorriente which is an affiliate of Chinese owned Corriente Resources.
Mr Pastor said that the negotiations have finished we expect to sign the final contract by January 30th 2011 referring to EcuaCorriente which plans to develop the country's Mirador copper mine.
Toronto listed Kinross signed a tentative agreement with the government last month, but is yet to sign an operating contract for its Fruta del Norte gold project.
Mr Pastor said that the board of directors has to give us an answer in February, because that's when the shareholders will meet. He was confident the parties would sign a formal deal next month.
Kinross said that its tentative agreement would result in keeping the state's share of the project's economic benefits at a minimum of 52%. This would be paid in royalties, corporate income taxes, a windfall profits tax and other levies.
The government said in November that the Kinross deal would result in the company paying about half of its income, after production costs in taxes and royalties. Ecuador has no mining industry to speak of, and leftist President Rafael Correa is eager to attract investment to tap the country's big copper, gold and silver deposits. However, he is trying to reap high benefits from miners and negotiations with potential investors have been lengthy.
The government said that the agreements will be a template for future mining deals that should let Ecuador develops a large mining industry in which the state will have a greater degree of control and pocket most of the profits.
Ecuador is set to negotiate contracts this year with International Minerals over its Rio Blanco gold and silver project with EcuaCorriente over its Panantza San Carlos copper deposit and with IAMGold which plans to develop the Quimsacocha gold, copper and silver mine. Those three are in relatively advanced stages of exploration but junior miners have about 15 other exploration projects under way.
Analysts said that the tough terms of the deals, and the risks of doing business in a socialist country, could deter miners from investing to develop their projects in the mineral rich Andean country.
(Sourced from Reuters)
