Ecuador may not sign mining deal with Kinross: Pastor

Thu Feb 16, 2012 1:40pm EST
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By Alexandra Valencia

QUITO (Reuters) - Ecuador may not sign an operating contract with Kinross (K.TO: Quote) over its Fruta del Norte gold project because the Canadian company wants to renegotiate terms of a tentative agreement, Energy Minister Wilson Pastor said on Thursday.

Ecuador's leftist President Rafael Correa is eager to attract investment to tap the country's big copper, gold and silver deposits. But he is trying to maximize government revenue from mining, and negotiations with Kinross and Chinese-owned Ecuacorriente have been lengthy.

"It's possible that we may not sign a contract with Kinross," Pastor told reporters after saying that the Toronto-listed company wants to renegotiate the terms of a tentative agreement it signed with Ecuador in December.

On Wednesday, Kinross said it wanted to renegotiate terms of the current deal, under which the company would pay roughly half its income, after production costs, in taxes and royalties.

Ecuador is also negotiating a mining deal with Chinese-owned Ecuacorriente for the company's Mirador copper project.

"Last Thursday we signed a tentative agreement with Ecuacorriente ... We'll sign a contract in the last week of this month," Pastor said.

According to the government, the two deals would involve total investments of some $2.8 billion - about $1.2 billion by Kinross and more than $1.6 billion from Ecuacorriente.

The government says the contracts will be a template for future mining deals that should let Ecuador develop a large mining industry in which the state will have a greater degree of control and pocket most of the profits.   Continued...