September 8, 2008 / 12:44 PM / 11 years ago

Ecuador plans 3-8 pct mining royalty on sales-bill

QUITO, Sept 8 (Reuters) - Ecuador plans to charge mining companies a 3 to 8 percent sliding-scale royalty based on sales and will negotiate terms of new extraction contracts, according to a draft of the mining bill obtained by Reuters on Monday.

The highly anticipated bill sets tougher environmental controls, limits exploration and forbids companies from filing suits on courts outside South America. However, it also offers miners a few tax breaks and doesn’t limit the ownership of mining assets as some analysts feared.

A top mining ministry official confirmed the authenticity of the bill document released by the the country’s mining chamber website (www.cme.org.ec.).

However, the official, who asked not be named because he was not allowed to speak publicly, said the draft bill could be changed as it is reviewed by President Rafael Correa.

The new mining law, which is expected to be introduced after September, is key for the development of the country’s nascent sector that has recently found massive gold, silver and copper deposits coveted by industry giants.

Correa, a leftist economist who took office last year, says he supports big mining projects, but he has kept investors jittery with his erratic mining policy that allowed for a ban on mining activity and the takeover of hundreds of concessions in April.

Ecuador lacks significant output of precious metals, but a handful of foreign companies including Corriente Resources CTQ.TO and IamGold Corp (IMG.TO) are exploring for minerals. (Reporting by Alonso Soto; editing by )

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