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4/24/08

Some Ecuador scuttlebutt that's worth passing on

In Latam there are rumours and there are rumours, and if I had a dollar for every rumour (etc etc)..............But this one is quite interesting and it passes the major tests for scuttlebutt

1) The source is not a BS merchant (and no, i'm not telling you)

2) It's logical

3) It's relevant

......so i'm gonna take a flyer and share it.

It concerns the concessions that are getting taken back by the gov't (again, theoretically....for argument's sake here we're going to follow the gov't line and ignore the legal minefield they've set themselves) and goes like this:

Word from the Ministry of Mines and Petroleum is that once the 3000+ fallow concessions are gathered back in, the government will put them up for tender. But the obvious question here is "Who in their right mind will buy a concession from a gov't they can't trust to honour a deal?" I mean, would a newbie want to come in on a concession after the stunt Ecuador has just pulled on the serious foreign mining companies? This offer is shaping up to be the "lobster thermidor in bar mitzvah" variety.

Well, this has finally occurred to the bright sparks in the Ecuador gov't, especially the Ministry of Mines and Petroleum (who are spitting mad at Acosta's Assembly, by the way). And the answer they've recently....like really recently...come up with is to re-sell the concessions to the same mining companies that lost them. Of course, they'll be going up as public tender, but "preference"* will be given to the ex-holders. This serves three purposes:

1) It backs up the support the Presidential executive wants to show the mining sector (please don't confuse the Presidency right now with the attitude of the Constitutional Assembly)
2) If the gov't lays on the guarantees to the miners, it guarantees buyers for the concessions held by the large miners.
3) The Ecuador gov't gets a revenue result that it can show to its people, thus justifying its manoeuvres.

The bottom line is that Ecuador will get money for its "serious" concessions, and all those silly concessions that included town squares and churches never see the light of day again. The miners get back what was rightfully theirs, and also they are going to have to get love from the gov't before opening the purse strings, so we can also expect some concrete pro-mining statements from out of Ecuador on the back of all this.

Assuming, of course, my juice is good. I think it is.

*please note the italics and the speech marks.