Ecuador aims to attract at least $750 million in foreign mining investment during the first quarter of 2016 by opening new areas rich in gold and copper for exploration.
The Andean聽nation, feeling the pinch of long-sustained weak oil prices, has high hopes that mining incentives and tax benefits will polish its tarnished image, eventually attracting foreign firms to help develop its riches.
鈥淲e have 25 mining areas to allocate,鈥� Strategic Sectors Minister Rafael Poveda (in Spanish). 鈥淲e have built a map of strategic areas that could be assigned to foreign companies for exploration.鈥�
While a handful of foreign miners have ventured into the聽country in the past decade, investment has been minimal, especially after 2013, when Canada-based Kinross Gold (TSX:K) (NYSE:KGC) , Fruta del Norte, selling it to a company belonging to the Swedish-Canadian Lundin family for $240 million, a fraction of the $1.2 billion Kinross paid in 2008.
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President Rafael Correa has been trying hard to make the country more business friendly. New legislation adopted this summer is designed to help create public-private partnerships.
The nation has also made a point of highlighting the comparative benefits of choosing Ecuador over other Latin American countries as a mining destination.
Minister of Mines, Javier Cordova, recently (subs. required), electricity cost are significantly lower 鈥� about one third the cost of what they are in Chile and Colombia and about half the cost of electricity in Peru.
Ecuador is open for business, says President Rafael Correa. (Image courtesy of )
Currently, Ecuador ranks 115th out of 189 countries in the World Bank鈥檚 annual 鈥淒oing Business鈥� index. Transparency International ranks it 110 out of 175 countries in its Corruption Perceptions Index.
The Heritage Foundation鈥檚 annual index of economic freedom puts Ecuador at No. 25 out of 29 countries in South & Central America, saying the country lags significantly 鈥渋n promoting rule of law and has yet to establish a judicial system that is free from political interference.鈥�
Despite the renewed push for mining, oil remains the most important sector for the country鈥檚 economy. Yet, producers have been dealing not only with low crude prices, but also with 鈥渞esource nationalism.鈥�
After taking office, Correa changed the way the government structures agreements with private oil companies, moving Ecuador from production-sharing agreements to service contracts.
The that while that step has increased the government鈥檚 share of revenue and state oil production, it has 鈥渄eterred the interest of private sector participants.鈥�
But state-owned oil company Petroamazonas doesn鈥檛 seem worry about it. It recently said per day next year, comparable to the 2015 level, as well as a 2016 budget similar to this year鈥檚.