Ecuador to vote on ground-breaking law to allow large-scale mining

Ecuadorean lawmakers vote this week on reforms to the country’s mining law, which aim to pave the way for large-scale mining in the Andean nation, eager to attract investment to reduce the economy’s dependence on oil exports.

Ecuador does not currently have a large-scale resource industry, but the country is largely unexplored and could potentially have big copper, gold and silver deposits.

Socialist President Rafael Correa, who won a sweeping re-election victory last February, has been trying hard to lure companies to tap metal reserves estimated at $115 billion, based on data from the nation’s mining chamber, after foreign-direct investment fell last year and economic growth slowed to 5% from 7.4% in 2011.

So far, however, the country has signed only one investment contract for a large-scale mining project with the Chinese-owned Ecuacorriente S.A. for the open-pit Mirador copper project. The company expects to start production at the end of 2015.

Authorities have also been negotiating with Canadian Kinross Gold Corp. (TSX: K) (NYSE:KGC) for the last year and a half to allow the gold mining company operate in the Fruta del Norte project, said to have the largest deposits of the shiny yellow metal in the country.

Copper and Oil

Chile’s Codelco —the world’s largest copper producer— has joined forces with Ecuador’s state-run mining company, Enami, to develop the Junin deposit in the north of the country.

Correa has also been trying to boost the country’s oil sector. As OPEC’s smallest member, the South American country’s oil production has been stuck at around 500,000 barrels of oil equivalent per day due to a drop in foreign investment to less than $1 billion a year.

But his government expects to attract investments worth around $1 billion in oil exploration for some 16 blocks in the Amazon, most of which will be offered in auction later this year.

Creative Commons image by GobernacionImbabura