Ecuador courting mining investors to finance reconstruction

Ecuador's President Lenin Moreno, who was sworn in last month, is reaching out to both local and international miners in a bid to garner more investment as the Andean country seeks to finance infrastructure spending.

The government has lined up US$415mn in mining exploration commitments over the next four years, mining minister Javier Córdova told a group of representatives of the Andean country's chambers of commerce and industrial groups.

Mining investment in Ecuador, which rose fivefold from 2013-16, is expected to quadruple in 2017-2020 as the government promotes tax stability contracts and tax rebates, reopens a mining registry, works to improve community relations and upgrades the country's transport infrastructure, Córdova said.

The country's mining registry has awarded nine concessions totaling 22,756ha and another 8,611ha are under evaluation since being reopened in March 2016, according to the ministry.

Former president Rafael Correa in 2015 created a mining ministry and announced plans to promote 36 mining projects to produce gold, copper and molybdenum estimated to be worth US$200bn.

Córdova met in Quito with Alfredo Martínez, head of the Ecuadoran business committee (CEE), and Rodrigo Izurieta, head of the mining chamber.

"The country has excellent geological potential," Córdova said in a statement. "About 10% of its territory has been explored."

The ministry last week announced BHP Billiton's plans to invest US$41mn over the next four years in mining exploration in Ecuador's Imbabura province. UK miner SolGold, in which Newcrest Mining is a shareholder, has also invested US$40mn in the Cascabel copper-gold project to date, according to the miniustry.

"Foreign investment is fundamental for us, and has been one of the main goals of the mining ministry over the past two years," Córdova said in an earlier statement.

The award of a construction contract for Lundin Gold's Fruta del Norte gold project to Chile's Mas Errazuriz and local firm Semaica underscored an emphasis of involving more Ecuadoran firms in the mining industry, he said.

Other mining deposits in Ecuador include EcuaGold Mining's Río Blanco and INV Metals' Loma Larga gold-silver projects

Reconstruction

President Moreno, 64, who narrowly defeated market-friendly opposition candidate Guillermo Lasso in the April elections, met with his cabinet this week to review public spending plans.

Finance minister Carlos de la Torre aims to cut the country's fiscal deficit to 4.6% of GDP by shelving some infrastructure projects, according to state news agency Andes.

The country is working to rebuild its northern coastal regions after a 7.8 earthquake killed 673 people and left 30,000 homeless, and caused US$3.4bn in damages in Esmeraldas and Manabí provinces in April 2016. Floods and landslides sparked by the El Niño phenomenon have also damaged 30,000 homes and wiped out thousands of hectares of farmlands this year.

Ecuador, which depends on crude oil for half of its national budget, struggled to meet its goals last year after commodities prices plunged. The economy contracted 2% in 2016 and is expected to grow less than 2% this year, according to Fitch Ratings.