Ecuador's Mines and Petroleum Minister Derlis Palacios signed the agreement with Chile's state-owned Codelco.

According to the deal, state-run Codelco will provide the necessary know-how and investments for prospecting, geological surveys and basic exploration tasks in Ecuador.

QUITO, Ecuador – Ecuador's Ministry of Mines and Petroleum signed an agreement with Chile's state-owned mining company, Corporación Nacional del Cobre (Codelco), to carry out exploration and potential mining operations in central and southern Ecuador. The contract is for an initial term of four years and is open for renewal by mutual agreement.

Under the contract, reported Radio Cooperativa, Codelco will provide the necessary know-how and investment to carry out prospecting, geological surveys and basic exploration tasks worth approximately US$1 million. Codelco will have access to a dozen state-owned mines and Ecuador will provide “all necessary assistance, while protecting the environment”.

The agreement was signed in the town of Gualaquiza by Ecuador's Mines and Petroleum Minister Derlis Palacios and Codelco President José Pablo Arellano. The ceremony was also attended by Ecuador’s President Rafael Correa and Chilean Mining Minister Santiago González.

As reported by ANSA, the parties agreed that if mineral prospects are found, a joint venture will be established between a Codelco subsidiary and Ecuador's newly-created National Mining Company, formed as part of the country's new mining law approved by Congress in January.

“We are very satisfied with this step which paves the way for a joint venture with the Ecuadorean government,” said Arellano, according to Radio Cooperativa. Meanwhile, President Correa told EFE that his government's mining policy was necessary “for the country to emerge from underdevelopment and to attend to the poorest. We cannot live as beggars sitting on a sack of gold”.

Correa added that 60 percent of future mining royalties would go to local community projects in the mining regions. The Ecuadorean government estimated that that country had potential mineral reserves of US$110 billion.

According to El Universo, President Correa will also sign similar agreements with Venezuela and Bolivia. However, despite Ecuador's efforts to promote copper, gold and silver mining projects with the new law, the legislation has met resistance from indigenous and ecological groups who argue that it will allow environmentally harmful large-scale mining.