ECUADOR

ECUADOR

Ecuador wants mining reforms via assembly

22nd August 2007

By Alonso Soto

QUITO, Aug 22 (Reuters) - Ecuador's President Rafael Correa wants an upcoming special assembly on rewriting the constitution to forbid open pit mining and to prevent drilling in biologically rich areas, said the government's top candidate for the body.

Alberto Acosta, Correa's pick to lead the campaign to win a majority in the Sept. 30 vote for assembly seats, said reforms are needed to protect the country's ecology from the nascent mining industry. "Ideally, I would prefer to stop all large-scale mining," Acosta, a former energy and mines minister who quit to run for the assembly, told Reuters. "But at least by stopping open pit mining, we can protect our natural wealth."

Acosta, who during his six-month stint in the ministry had an aggressive stance against mining, said he would push for all mining in Ecuador "to be be underground."

Deputy Mining Minister Jose Serrano in later comments said the proposals for mining reforms are still under discussion. He said the government was consulting with environmentalists, communities and mining companies for a final package of reforms. "The president orders are to continue with the dialogue so we can have reforms in which we all agree on," Serrano told Reuters.

Serrano, who in July replaced an environmentalist in the job, has started a review of concessions in the southern province of Azuay amid calls from environmentalists and local communities to cancel concessions.

Correa, a former economy minister promising broad reforms to curb traditional parties, has put his political future on the line and vowed to quit if his supporters fail to clinch a majority in the assembly to overhaul the constitution.

The leftist president's chances of securing a majority are slim as experts warn that the proportional method for assigning seats could lead to a fragmented 130-member assembly.

Acosta said he plans amendments to forbid any mining in areas close to water sources and where local communities prohibit extraction of precious metals. "We will set a criteria to review mining concessions... and take back some of them," Acosta said without giving any more details. "We will also talk about introducing royalties."

Ecuador lacks significant production of precious metals, but Canadian companies such as Corriente Resources, Iamgold Corp. and Aurelian Resources Resources Inc. are exploring for gold and copper.

Mining companies don't pay royalties to the government, but instead an annual concession ownership fee. Environmentalists and villagers have clashed with miners to demand the government take back mining concessions they say damage local communities.