Ecuador mining law to boost state control in deals

QUITO, April 21 (Reuters) - Ecuador wants more royalties and tougther enviromental controls over mining firms exploring in the Andean country as part of a new mining law, Mines and Oil Minister Galo Chiriboga said on Monday.

Ecuador froze all mining exploration and revoked most concessions on Friday, in a move to increase state control over the nascent sector that has worried foreign investors.

The stock of mining firms with operations in Ecuador has tumbled on the implications of the order that halts exploration until a new mining law is approved and reduced mining holdings to only three concessions per company.

"This law will have 113 articles ... and in eight days we will start a national dialogue with small, medium and large sectors to discuss the draft document of law," Chiriboga told reporters in Quito. "We will better regulate metal and non-metal exploration."

He said the mining decree approved last week will revoke around 4,474 concessions of 5,064, most of which are in exploration. He added that firms will choose the three concessions they want to keep.

Chiriboga did not say when the new law will be introduced, but a final version could be ready by late May. The decree approved on Friday by a government-controlled assembly says the law has to be approved within six months.

Chiriboga rejected rumors that a new state-run mining company will take over revoked metal concessions, and said the firm will start mining for construction minerals like cement.

The mining law draft document says royalties could be imposed on total production or net profits among other options.

Ecuador lacks significant production of precious metals, but dozens of companies such as Aurelian Resources (ARU.TO: Quote, Profile, Research) and Corriente Resources (CTQ.TO: Quote, Profile, Research) are exploring for large deposits of gold and copper. (Reporting by Alonso Soto; editing by Marguerita Choy)