Kinross' exit creates major setback to Ecuador's large scale mining plans

Mining News  |  2013-06-11 07:57:42   |   By

The decision by Canada based Kinross Gold Corp to pull out of Ecuador's Fruta del Norte deposit has created another major setback to the country's large scale mining ambitions

QUITO (Scrap Monster) : The decision by Canada based Kinross Gold Corp to pull out of Ecuador’s Fruta del Norte deposit has created another major setback to the country’s large scale mining ambitions.

Located in the Zamora Chinchipe province in south-eastern Ecuador, the Fruta del Norte deposit has huge reserves of gold and silver. It is the largest gold deposit in the entire Andean country. The Kinross management and the Ecuador government officials have been involved in negotiations for almost two years now. Both parties failed to reach an agreement on certain key terms, which forced Kinross to opt the exit route. As per sources, the talks stumbled upon government insisting for 70% windfall tax on sales in excess to a predefined base price.

The country which has immense untapped copper, gold and silver deposits has so far been successful in roping in only a single large-scale mining project-the Mirador copper mine project by the Chinese-owned Ecuacorriente S.A. which is expected to start production by 2015 end.

The law makers of the country are to vote on the reforms to the country’s mining law in a bid to attract large-scale mining investments. The foreign direct investment in Ecuador had fallen last year leading to a slowdown of the country’s economic growth.