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2009-11-12

Ecuador adds regulations to Mining Act

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Ecuadorian President Rafael Correa visited El Oro province to sign the new regulations, which force mining companies to pay 50 percent of their profits to the state as royalties.

Ecuadorian President Rafael Correa visited El Oro province to sign the new regulations, which force mining companies to pay 50 percent of their profits to the state as royalties.

Thursday, Nov. 12

QUITO, Ecuador – Ecuador’s government is describing its new mining regulations as an “important step” toward solving problems in the sector.

Ecuadorian President Rafael Correa signed the regulations into law on a Nov. 4 visit to El Oro province. A major change brought about by the new regulations is that mining companies will now have to pay the state 50 percent of their profits as royalties.

The regulations, according to El Comercio, also increase state control over mining and impose higher environmental standards on mining companies. Correa said that the government would not reverse course on the Mining Act because “responsible mining development is essential for the development of our country.”

In recent months, according to Reuters, Ecuador has been rocked by a wave of protests organized by the Confederation of Indigenous Nationalities of Ecuador (CONAIE), an umbrella group that claimed mining was endangering the environment.

As the protests swelled, the Correa administration searched for an alternative way of attracting mining investment while meeting the demands of the indigenous communities. Non-Renewable Natural Resources Minister Germanico Pinto told Radio Sonorama that the new regulations were “a turning point for responsible mining.”

The regulations modify the January 2009 Mining Act, which environmentalists and indigenous groups claimed “failed to protect the environment.” Pinto himself, according to EFE, admitted that some features of the act were “open to improvement” and added that the government was “open to dialog.”

The act regulates mining activities and, according to Reuters, gives the state sole power to issue licenses for multinational companies, which, under the new regulations, will now have to submit environmental impact studies before operations begin.

In mid-2008, work stopped at some 3,000 private mining leases in Ecuador after the government called a temporary halt to exploration while it worked on regulating the sector.

Correa aims to turn Ecuador into an exporter of ore by 2012, and, according to EFE, there are plans in the pipeline for further regulations to boost small-scale mining and mining by hand, as well as environmental regulations, which will be enforced by newly-created supervisory agencies.

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