Ecuador on the verge of closing second large-scale mining deal
Ecuador’s government and Canada’s Kinross Gold could sign an agreement in June to develop the long-delayed “Fruta del Norte” gold project, the country’s largest mine, reports local newspaper El Telégrafo.
Non-renewable Resource Vice Minister, Federico Auquilla, was quoted as saying that the contract wasn’t finalized in December “not for lack of willingness of the Government but due to [Kinross] financial issues.”
Cost overruns and a massive write-down have driven Kinross Gold's stock down enough for bankers to see it as Canada's biggest potential takeover play, reports Reuters. It adds that obstacles to a bid for the senior gold producer may be too big to overcome.
Auquilla added these negotiations are likely to be completed by mid-year, as leftist President Rafael Correa is eager to attract investment to tap the country’s big copper, gold and silver deposits. However, he is also trying to maximize government revenue from mining, and negotiations with miners such as Kinross have been lengthy.
One of these ongoing talks ended well. On March 2, Chinese-owned mining company Ecuacorriente signed a contract to invest US$1.4 billion over five years for extracting copper in country’s southern Amazon.
The deal was the first of its kind in Ecuador, which has no large-scale mining to speak of.
Correa’s government sees mining as a way of counter-balancing the impact on the economy of oil, which accounts for more than 50% of the country’s exports.
Contracts for several other high-profile deposits, requiring a total investment of more than US$3 billion, could be signed by the end of the first quarter once the issue of royalty payments is resolved.
These projects up for negotiations include China’s Tongling Nonferrous Metals Group for the Mirador and San Carlos copper deposits, Canada’s International Minerals (TSE:IMZ) for the Rio Blanco gold mine and IAMGold’s (TSE:IMG) Quimsacocha gold-copper-silver mine.