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Saturday, September 13, 2008

Key details of Ecuador's mining bill draft

Sept 8 (Reuters) - Ecuador's leftist government plans to tighten control of the country's mining sector with a new law that will set hefty royalties and tougher environmental checks.

A copy of the draft mining bill can be downloaded from the country's mining chamber website (

Following are some key details of the mining bill that is currently under review by President Rafael Correa before it is introduced to the legislature later this year:


Ecuador is to set a 3 to 8 percent, sliding-scale royalty based on the sales of minerals extracted. The royalty percentage scale will move depending on production levels.


Ecuador and companies will negotiate new mining extraction contracts on a case-by-case basis. A general mining contract is being drafted by the government to serve as the starting point for negotiations.


Contract disputes between mining companies and Ecuador will only be resolved by local or South American courts.


Ecuador will be able to designate special mining areas where the state mining company will have preferential rights to develop properties. Mining officials have said those areas are mostly for mining of construction minerals such as sand.


Mining companies will have up to eight years to explore for minerals in concessions. Another two years will be granted to evaluate the economic viability of the deposit before requesting a mining permit.


There will be no limits on the number of concessions a company can hold during exploration.


Mining companies will have to issue detailed environmental impact studies to get exploration and extraction permits. Some of the requirements also include water-use permits and periodic on-site examinations.

Concessions can be revoked by the state if companies are deemed to have inflicted grave environmental damage on concessions.


Local communities will not hold veto power to shut down mining projects.

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