Report: “Mining in Junin is off the Administration’s Agenda”
A recent report from the Periodico Intag:
MINING IN JUNÍN IS OFF THE ADMINISTRATION’S AGENDA
José Rivera and Mary Ellen Fieweger
MAYOR MEETS WITH LIVESTOCK ASSOCIATION IN CHALGUAYACO ALTO
The Correa administration has decided against mining in the north of Ecuador. According to community leader Israel Pérez, Cotacachi’s mayor, Alberto Anrango, made that announcement on August 21 during a meeting in Chalguayaco Alto with the community’s Livestock Association. However, mining will go ahead in the south of the country and will continue to be an important economic activity in Ecuador. To that end, the administration is creating a state mining company.
Meeting in Quito
Mayor Anrango informed some 35 persons, including residents, parish and county authorities, and representatives of organizations, of his visit to the Ministry of Mines and Petroleum on August 11. According to Mr. Pérez, Minister Germánico Pinto and José Serrano, undersecretary of Mines, assured him that, in creating the country’s development plan, the administration has decided against mining in the north of Ecuador. INTAG Newspaper’s staff was unable to communicate with the Mayor to confirm this statement. However, a high-level official of the National Planning and Development Secretariat (SENPLADES, Spanish acronym), who asked to remain unnamed, stated that the administration has decided to promote non-mining activities in the north of Ecuador.
Community leaders in Intag have reacted with a combination of satisfaction and caution to the news. Mr. Pérez stated that members of the Association and the community are pleased with the decision. On the other hand, José Cueva, president of Consorcio Toisán, said that residents shouldn’t count on the administration’s word in this matter. He also indicated that the decision is not a result of the government having come to the conclusion that mining is a harmful activity but, rather, to the struggle waged by communities. In addition, he said that although President Correa and his cabinet believe that they have won the battle for mining in the south, they still have to deal with Salvador Quishpe and Marcelino Chumpi, prefects of Zamora Chinchipe and Morona Santiago provinces, respectively. Both have called for a plebiscite to assure that the rights of communities affected are respected. In light of this opposition, “I don’t believe there will be mining anywhere in the country,” said Mr. Cueva.
Correa creates state mining company
In related news, Ministro Pinto announced to El Ciudadano, the official newspaper of the Correa administration, that the government is creating a state mining company that will be the equivalent of PetroEcuador, the state oil company. According to the official, the mandate of the new company, created by presidential decree, will be to find investors for mining projects and form strategic alliances that will serve the interests of the state and of Ecuadorian citizens.
According to the Northern Miner, a Canadian trade magazine, the Ecuadorian government suspended a large number of mining concessions during the nine-month period between the passage of the mining moratorium by the Constitutional Assembly and the creation of the new mining law. The moratorium created fear among mining executives who thought that their companies would lose promising projects or that royalties demanded by state would increase.
However, the magazine states, miners have been reassured as the administration has returned many concessions to companies and has given permission to go ahead with exploration and production activities. The companies in question include Kinross Gold, with a massive gold deposit called Fruta del Norte, and Dynasty Metals and Mining, which is nearing the production phase in its projects in Jerusalem and Zaruma. The projects mentioned are located in the south of the country. According the Ecuadorian Chamber of Mining, an independent organization that promotes the mining industry, the state company will probably promote the development of concessions in the early phases through a public auction process, and under the guise of public-private projects.
Slight impacts to sector
Bill McCartney, CEO of Dynasy Metals, states that the administration wants to create joint ventures because it doesn’t have the expertise or the infrastructure to manage a mining project. He adds that while it is difficult to predict the impact of a state mining company on the exploration phase, in particular, for a company like Dynasty, which is nearing the production phase, the impact will be slight.
“More important for Dynasty are the regulations being created, said McCartney. These will determine the rules as regards taxes and royalties. Dynasty Metals predicts that it will process around 300 thousand tons per year in Zaruma, the site of half the resources owned by the company, according to estimates. The regulations will also determine requirements related to the environment, the labor force and communities in the mining area. Mr. McCartney says that, as he understands it, the Ecuadorian government has consulted with its neighbors to the south, Peru and Chile, for advice on the content of regulations. However, no one knows when they will be ready. While Minister Pinto stated to El Ciudadano that his staff is about to finish the document, Dynasty’s representative is skeptical. “They’ve been singing that song for months now,” he said.
