Ecuador plans to send Congress broad mining reforms

By Alonso Soto

QUITO, Ecuador, June 22 (Reuters) - Ecuador will send a bill to Congress soon to tighten controls on its nascent mining sector and ease the concerns of activists who have protested the environmental risks of awarding concessions.

A top mining official told Reuters in an interview on Friday that the bill will modernize one of the least effective mining laws in Latin America, imposing stricter environmental controls, limiting the duration of exploration concessions and imposing royalties.

Ecuador has no commercial mines, but as production prospects grow on several gold and copper properties, environmental protests have become more commonplace.

"We need Congress to approve these reforms soon," Deputy Mine Minister Jorge Jurado told Reuters. "We can't wait any longer."

The bill would be popular among green groups who have organized protests in mining areas to demand an end to concessions and more protections for the environment.

MORE STATE CONTROL

Jurado said the bill could be in Congress within a month, giving Congress 30 days to change, approve or reject it.

The proposed bill reflects the leanings of President Rafael Correa, who came to power in January after a campaign that promised more state control over its natural resources.

Correa, an ally of Venezuelan President Hugo Chavez, has pledged to rework oil contracts and review mining concessions.

"We are aware that there will be changes ... we don't have a problem with royalties as long as they are reasonable," said John Haigh, a spokesman at Ascendant Cooper (ACX.TO: Quote, Profile, Research). "They don't need to reinvent the wheel or rush into this."

Jurado said that under the bill, exploration concessions that are currently granted for 30 years could be shortened to two or three years. At the same time companies would be more accountable for the impact of exploration activities.

Currently, Jurado said companies can spend years exploring a claim without informing the government about their operations.

Companies will be allowed under the new bill to request extensions on exploration concessions, Jurado said.

He said Correa is also close to approving the creation of a separate mine ministry from the current energy and mines ministry and forging ahead with plans to build a state-run mining firm.

"We only need a political decision," said Jurado, a former environmental activist. "We could start this process in the coming weeks."

An assembly that aims to rewrite the constitution and whose members will be elected in September would determine where and how some of the largest mining projects would be developed, Jurado said. It could also strike down projects.

Companies such as Corriente Resources, Iamgold Corp. and Aurelian Resources Resources Inc. are exploring for gold and copper in Ecuador.