Major Aussie miners BHP, Hancock to mine in Ecuador - report
Ecuador may soon welcome mining majors BHP Billiton (ASX:BHP) and Hancock Prospecting after country authorities qualified recent talks with such companies as positive.
Ecuador began last month granting licences for new exploration areas, with over 300 of them to be awarded by year-end.According to Mining Minister Javier Cordova Unda, BHP is keen on a few copper projects, including one that would imply to partner up with the country- owned miner Enami and Chile's Codelco in their joint Llurimagua copper and molybdenum project, Bloomberg reports.
After a hiatus of about six years, Ecuador began last month granting licences for new exploration areas, with over 300 of them to be awarded by year-end.
As a result, the Andean nation already has one of the big Australian players working at home. Last month, Newcrest Mining (ASX:NCM) entered into a financing agreement with SoldGold (LON:SOLG) to help it develop its giant Cascabel copper project, near the border with Colombia.
And in June, Canada's Lundin Gold (TSX:LUG) submitted an application to move forward with development of its $669-million Fruta del Norte, Ecuador's largest gold project.
Mining push
Ecuador is open for business, says President Rafael Correa. (Image courtesy of Ecuador's Gov't)
Ecuador President Rafael Correa has been trying hard to make the country more business friendly. New legislation adopted last year was, in fact, designed to help create public-private partnerships.
The nation has also made a point of highlighting the comparative benefits of choosing Ecuador over other Latin American countries as a mining destination.
Electricity costs are significantly lower than in other close-by nations - about one third the cost of what they are in Chile and Colombia and about half the cost of electricity in Peru.
Social-political conditions, however, are not ideal. Currently, Ecuador ranks 114th out of 189 countries in the World Bank's annual "Doing Business" index. Transparency International ranks it 110 out of 175 countries in its Corruption Perceptions Index.
Despite the renewed push for mining, oil remains the most important sector for the country's economy.The Heritage Foundation's annual index of economic freedom puts Ecuador at No. 25 out of 29 countries in South & Central America, saying the country lags significantly "in promoting rule of law and has yet to establish a judicial system that is free from political interference."
Despite the renewed push for mining, oil remains the most important sector for the country's economy, which would benefit from the entrance of major resources companies.
Agreements between big miners and juniors are regaining importance. BHP, which has made copper one of its main pillars, recently struck a deal with Canadian junior Bay Holdings, agreeing a potential right to get a 75% stake in the miner, which has a copper project called Storm in the far north of Canada.
Competition for quality exploration projects will ramp up as the quest for new assets is becoming more difficult, Newcrest chief executive officer Sandeep Biswas told reporters Tuesday according to The Australian. He added that Newcrest's stronger financial position would support its pursuit of growth opportunities.