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Tuesday, 13 November 2007

Mineral Royalties Watch (Ecuador)

Reuters are reporting some interesting developments in Ecuador, where the Governments wants the share of pie:

Ecuador wants to establish contracts between the government and mining companies, similar to deals the country has with oil firms, Oil and Mining Minister Galo Chiriboga said on Wednesday. "We want contracts that regulate the extraordinary revenues from these companies," Chiriboga told reporters. "They should be similar to current oil contracts." He said contracts will set royalties at a referential price for the mineral extracted, but like with oil deals, mining firms will have to share part of their windfall revenues if metals' price rise in the market. He added that mining royalties will be imposed on a "case by case" basis.

Chiriboga said contracts will establish stricter environmental regulations and boost the participation of local communities.
"We need to sit down and talk because the current mining titles are insufficient for us," he said. Government talks will be held while the mining ministry works on a proposal to set mining regulations in the new constitution, which has to be approved by a government-controlled assembly.

Mining companies currently have no contracts with the government or pay royalties, but an annual ownership fee for their concessions.


  1. Check out Magande and Shakafuswa's latest public comments on the mining contracts.

    (By the way, the importance of this issue is one of the reason I resent The Post's going subscription only. This issue is everyone's concern, and shoulndn't be limited to only those with access to The Post. Also, has anyone noticed The Times and The Daily Mail's abscence from the debate? The Times didn't update it's website for 12 days, and the Daily Mail is still offline.)

  2. I expect the Times to hide in times of trouble! The Editors have decided that rather than defend the indefensible, better to keep quite.

    At the end of the day, these Editors are human and must realise that Zambia has a very bad deal indeed.

    Its interesting to note that the IMF representative on the BBC documentary when asked why no one thought it prudent to allow for Zambia to get better returns if the mines did well, simply said "I don't know". Gross incompetence indeed.

  3. I have said it before, but it is easy to hide corruption as incompetence.

    The Bush Administration does it al the time.

    And maybe incompetence is also a function of corrupt appointments, corrupt contracts, etc.

  4. Not sure they are the same thing. But what is clear is that if you put measures in place to tackle corruption they would most certainly help reduce incompetence and vice versa.


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