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Ecuador seeks to tax miners` windfall revenue Ecuador to introduce 70% windfall tax Ecuador to introduce 70% windfall tax Ecuador wants to slap a 70% windfall-revenue tax on mining companies which would kick in when the prices of copper, gold and other commodities exceed a certain level, Oil and Mining Minister Galo Chiriboga told Reuters on Tuesday. The tax would apply to small miners already present in the Andean country and to big international companies that might set up operations in the future if large discoveries are made. The new duty is part of a tax reform bill introduced on Monday by leftist President Rafael Correa, who proposes boosting state control over the economy and natural resources. "A clause will be included in contracts so that if there are extraordinary revenues due to a fluctuation in prices for that product, the tax norm will be applied," Chiriboga said in a telephone interview. Ecuador has already imposed a similar tax on foreign oil companies, who complain the move has made their operations inviable in South America`s number five oil producer. A U.S.-trained economist, Correa has joined allies Venezuelan President Hugo Chavez and Bolivia`s Evo Morales in seeking more state control over resources to benefit from soaring petroleum and metals prices. Chiriboga said a base price for a mineral will be decided on future mining deals and those firms will have to share 70% of their windfall revenue if the metal`s price rises above that benchmark on the international market. When asked if companies could negotiate the 70% proposed in the tax bill, Chiriboga said, "it will be very difficult to negotiate what will be a law ... this norm is applied in many countries." "The windfall tax of 70% seems big at first light, but the key here will be how high they set the reference price over metals," said Mark Turner, a Peru-based analyst with Hallgarten and Company. Ecuador has no significant precious metals output, but Canadian junior companies such as Aurelian Resources Inc, Corriente Resources Inc and Iamgold Corp are exploring for gold and copper. Analysts say big mining firms are interested in some of the projects that have discovered world-class deposits. The tax bill was sent to a 130-member assembly authorized to rewrite the constitution and where Correa`s party holds a majority. The assembly should easily pass reforms as it has legislative powers since it closed down Congress in November. Chiriboga said that in January the government will start talks with mining companies over reforms to the current mining law that will be sent to the assembly. "In those talks, we will deal with specific issues such as contracts and royalties," said Chiriboga, adding that contracts and royalties will be decided on a case-by-case basis. A top mines ministry source said the state will have a Canadian mining expert advising the government during the negotiation talks. Mining industry sources from foreign firms said the tax had not been discussed with the ministry in informal meetings.