Ecuador revokes 80% of mining concessions

Ecuador has suspended mining exploration activities and revoked a large number of concessions while it prepares new mining legislation.

The country’s government, headed by President Rafael Correa, says it has taken the dramatic action to secure greater control of Ecuador’s natural resources and increase the amount of profit the mining sector contributes to the state.

The ban could last for around 180 days and is accompanied by the cancellation of 80% of the country’s 5,000 plus mining concession.

Around 40 international mining companies operate in the country, contributing millions of dollars in investment to the mining economy.

It is understood that the Ecuadorian government believes the concessions were sold too cheaply and it will therefore be renegotiating their terms.

There are also plans to create a state-owned mining company to exploit the country’s mineral reserves, which are estimated at $220 billion.

No large-scale mining activity is currently taking place in Ecuador and critics of the country’s concession system say that it has favoured speculators rather than serious investors.

Toronto-based Aurelian Resources held a concession for the Fruta del Norte gold-silver discovery, which is believed to be a world-class prospect.

The company had plans to commence an initial development of the discovery this year.