Ecuador Congress OKs law to ease mining investment terms

Thu Jun 13, 2013 6:32pm EDT
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* Law delays windfall tax, sets royalty minimums

* Approval follows Kinross' decision to leave Ecuador

By Eduardo Garcia

QUITO, June 13 (Reuters) - Ecuador's lawmakers on Thursday approved a mining law that should speed the development of small and medium-size ventures, only days after Canada's Kinross canceled a massive $1.2 billion gold project in the country over a tax dispute.

Ecuador's mining industry is at its infancy, but the Andean nation is largely unexplored and could potentially have big copper, gold and silver deposits.

Socialist President Rafael Correa, who won a sweeping re-election victory in February, is eager to attract investment to reduce the economy's dependence on oil exports and help finance social spending - the key to his high popularity.

But the U.S.-trained economist wants the Ecuadorean state to take the lion's share of mining revenues. That prompted Kinross Gold to halt the development of its Fruta del Norte gold project on Monday because it considered the tax burden would have made the project inviable.

Yet the new mining law, approved with 105 votes in favor, 14 votes against and 14 abstentions, has generally been applauded by other investors.

"The law makes it very attractive to invest in small and medium-size projects in Ecuador. Regarding large-scale mining, the tax burden is still a big problem, especially the windfall tax," said the head of the Ecuadorean mining chamber Pablo Acosta.   Continued...