Ecuador wants higher royalties from US, Canadian miners

Thu May 26, 2011 6:01pm EDT

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* Operational contracts to be signed in July - minister

* Says Ecuador seeking more than 5 percent royalty

By Santiago Silva

QUITO, May 26 (Reuters) - Ecuador expects to obtain higher royalties from copper, gold and silver mines to be tapped by U.S. and Canadian companies in the Andean country, Natural Resources Minister Wilson Pastor said on Thursday.

"The law requires a 5 percent (royalty) and we are going to go higher," Pastor said at a news conference.

Negotiations with Canadian companies Kinross Gold (K.TO) and Ecuacorriente and U.S.-based International Minerals IMZ.TO are advancing well and they should sign operating contracts in July, Pastor said, not in June as he had stated earlier. Two other deals with Iamgold and Ecuacorriente should be completed next year. [ID:nN2937519]

The government expects $7 billion in mining investments over the next seven years from the world-class mining projects in southern Ecuador.

Ecuador, an OPEC oil-producing country, has a nascent mining industry, but it halted industrial mining activity in April 2008 to enact a new mining law and ensure more revenues for state coffers.

Kinross plans to develop Ecuador's largest gold project, Fruta del Norte, with proven and probable mineral reserves estimated at 6.8 million ounces of gold, and 9.1 million ounces of silver, the company's website says.

Kinross says Fruta del Norte is expected to produce an average of 410,000 gold equivalent ounces annually over the life of the mine. It plans to start production in late 2014.

Ecuacorriente plans to develop the Mirador copper mine, which it says has estimated reserves of 11 billion lbs of copper. Ecuacorriente is an affiliate of Canada's Corriente Resources, which in turn belongs to CRCC-Tongguan, controlled by China's Tongling Nonferrous Metals Group (000630.SZ) and China Railway Construction (601186.SS).

Canada's Iamgold operates the Quimsacocha gold mine and IMC is developing the Rio Blanco project.

(Additional reporting by Alexandra Valencia; Editing by Lisa Shumaker)

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