Welcome To The 300 Club HUB On AGORACOM

We may not make much money, but we sure have a lot of fun!

Message: Calling ebear - what's new in Ecuador?

Since you're the resident expert on Ecuadorian politics, I would like to ask you if anything has changed since the April Mining Mandate in Ecuador? Personally I have not seen a single actthat has moved mining forward in that country. Lots of hot air by politicians and some media type promotions, but no real advancements whatsoever. Am I right?

I wouldn't call myself an expert. I was able to follow the situation more closely by virtue of speaking Spanish, and I had a bit more context on the politics from my experience with Nicaragua and Chile in the 70's, but I had the same problem as the rest of us - being at a distance from events and unable to get the full picture that you would if you were there on the ground. That's why I deferred to otto on most points. He lives next door and has wider, more current experience than I do.

For example, to our dismay the 180 day moratorium continued. Why for heaven's sake! We don't know why would a government wants to stop its own people from working for no apparent reason? The Mining Law, touted a a top priority before and after the passing of the constituion, is seemingly forgotton. The windfall tax is first reported as dead and then not dead. The three concession rule is still not clarified, etc.....

Frankly, I've given up on the place, so I'm not really paying that much attention, outside of reading otto's blog. My goal is to completely divest, so any lift Ec. stocks get from positive news is for me a chance to sell. I'm already out of DMM, sold some K @18, and rolled into AEM. I wasn't fast enough to take all of it off, but I at least took my exposure down. I'll keep the warrants as a play on expanding FDN and eventually getting it into production, but I'm not holding my breath. As to the rest, there are better opportunities around now that the market's been beaten flat, so why bother with Ecuador?

In another word, nothing has changed since April. Maybe in retrospect, the "so called" buyout of ARU by Kinross is a blessing in disguise. Can you image the ARU SP if we have not been "assimulated" by Kinross? Not that Kinross is doing any great, but at least there is a little more cushion to the fall.

We'd have been killed, that's for damn sure.

Anyway, if you have some insight on the situation in Ecuador, please do share with us. The one thing I won't be surprised is that Raphael Correa is likely working very hard to change the constitution again to make himself "presendente for life". It seems once they got in no one likes to leave!

Maybe that's where the real priority of that government lies.

Their priority has always been to knock the pins out from under the old oligarchy to the degree that they never return. Unfortunately, this caused a lot of collateral damage at a time they could least afford it, and sent a very bad message to foreign investors.

I've stated elsewhere that I think Correa is a brilliant political strategist, but a mediocre economist. Unfortunately, it's the economy that matters most at this point, and things aren't looking that good. Oil production & revenue down, mining going nowhere. Food exports? Do people eat bananas in a recession? How about frozen shrimp?

I'll make one prediction. With international credit tight as a drum, and many capital projects only half finished, I see Venezuela taking an increasing role in Ecuador's future. This isn't necessarily a bad thing from an Ecuadorean perspective, but it will put foreign investors off. Not that there's much interest anymore. If it's true that I'm one of the better informed, what does that say for the rest of the market that gets their news from Bloomberg or Reuters?

Again, I see way more opportunities in other sectors and jurisdictions than Ecuador has to offer. I wish them luck, and I really hope it works out for the best, but for me, it's over.


New Message
Please login to post a reply