Canadian miners restart their engines in Ecuador

The government of Ecuador used the Prospectors & Developers Association of Canada (PDAC) convention in Toronto to announce that exploration drills will soon be turning again on Ecuadorian rock.

Jose Serrano Delgado, the sub-secretary of mines in the ministry of mines and petroleum of Ecuador said the ministry has lifted all suspensions on mining activities in Ecuador, and that formal letters notifying companies of this are in the mail.

The early word is that Kinross Gold (K-T, KGC-N) and Corriente Resources (CTQ-T, ETQ-N) will be able to restart their exploration programs in late March after nearly a ten month long hiatus.

That hiatus came after the government ordered a halt to all mining until it completed its new mining law.

In January, Ecuador approved a new mining law, and while details are still being sorted out, officials say it will include a provision for the government to earn roughly half of a mine’s profits through taxes and levies.

And while such a figure may seem outrageously high, it is much in line with the government cut in other South American mining countries like Chile, Peru and Brazil.

Regardless of the tax regime, for the time being Canadian miners are only too relieved to have the long wait over.

Although the wait could be a bit longer for Iamgold (IMG-T, IAG-N).

Reuters reports that a government official in Ecuador said it will take roughly 45 days before the government finishes a study on the company’s operations. The delay is in relation to some of its permits being in protected areas.

The move to restart the mining industry in the country comes within a context of falling crude oil prices and the global economic meltdown continuing unabated. Ecuador is an oil producing nation with a large deficit, and is in serious need of new sources of revenue.