NEW YORK, June 5 (Reuters) - Ecuador plans to change its mining law and offer tax incentives to attract foreign investors and spur investment in the stalled sector, a cabinet minister said on Thursday.
The government will adjust a windfall tax, which helped scuttle Canada’s Kinross Gold Corp’s investment in a major gold mine, and make changes to its mining law.
“These incentives will allow us to offer viable conditions for some projects and overall will help attract investment in all different steps of the process,” Strategic Sectors Minister Rafael Poveda told reporters.
These changes should help spur gold, silver and copper projects that have not gotten off the ground because of concerns about heavy taxation.
Kinross last year pulled out of Fruta del Norte, Ecuador’s largest gold mine, saying the government had refused to compromise over a 70 percent windfall tax.
The sector has not received any foreign investment for the last year despite a previous government effort to ease fiscal terms to attract investors.
Mining projects in Ecuador face among the highest tax rates of any in the region, with the government’s take of around 51 percent, according to a study by consulting group Wood Mackenzie.
Ecuador hopes to reach an agreement in two months with a new strategic partner for the development of Fruta del Norte, which holds reserves of 6.7 million ounces of gold and 9 million ounces of silver.
Companies from Russia, China and Canada have expressed interest.
China’s Ecuacorriente, the only mining company that has an active contract with Ecuador, is developing the Mirador project that will require some $1.4 billion in investment.
President Rafael Correa hopes to turn the mining sector into a driver of the country’s economic growth. (Reporting by Alexandra Valencia, writing by Brian Ellsworth; Editing by Marguerita Choy)