* Indigenous demonstrators descending on Quito
* Indian leaders say mining to ruin the environment
* Correa says protesters want to destabilize his government
By Eduardo Garcia
QUITO, March 21 (Reuters) - An anti-mining indigenous march neared Ecuador's capital Quito on Wednesday, underlining the threat protests could pose to President Rafael Correa's plans to develop large-scale mining with foreign investors.
Organizers say thousands of protesters have joined the march on-and-off - some wearing feathered headpieces, others carrying wooden spears - since it began from the Amazon region two weeks.
"Is not that we don't want development ... what we don't want is a new colonization that will harm indigenous communities," said Humberto Cholango, the head of the CONAIE umbrella indigenous group.
The government says numbers are paltry, and it has threatened anyway to block marchers from entering the highland capital of Quito as planned on Thursday.
High spending on roads, hospitals and schools have made Correa very popular in the Andean country of 14 million people, and he is well positioned to win an election in February 2013 if he decides to run for another term.
But indigenous peoples, who account for 7 percent of the population, often complain not enough welfare spending reaches their communities and that Correa's plans to sign mining contracts with foreign companies represent a shift to the right.
Ecuador currently has no mining industry to speak of and Correa, a U.S.-trained economist, is eager to attract investment to tap the country's big copper, gold and silver deposits and diversify the economy from its dependency on oil exports.
Earlier this month he signed the country's first ever large-scale mining contract, which calls for Chinese-owned Ecuacorriente to invest ${esc.dollar}1.4 billion in El Mirador, an open-pit copper project in the southern Zamora Chinchipe region.
Ecuador aims to sign four more contracts this year with Canadian gold miner Kinross, with International Minerals , with IAMGOLD, and a second deal with Ecuacorriente.
"We are ruining harmony with life ... Mr President we want you to show respect (for the environment)," Cholango told reporters on Wednesday, wearing a fedora hat typical in northern Andean regions.
Given Correa's robust popularity, such protests do not pose a threat to the stability of his government, but could snowball against large-scale mining and hinder projects, analysts say.
"They have the potential to harm investor confidence which is already pretty shaky, threatening projects in the country with serious operational disruption and the suspension of operations that can prove extremely costly," said James Lockhart-Smith an analyst with Maplecroft.
CORREA CONCERNED
Indigenous protesters played a key role in popular uprisings that forced two presidents to step down in 1997 and 2000 - and Correa is clearly annoyed at their latest march.
"They say they'll reach Quito on March 22. They won't be able to come in," Correa said when the march started two weeks ago as he urged his supporters to stage a counter protest.
Correa has accused Indian leaders of being in cohorts with his political rivals to destabilize his government ahead of the election, but they reject that and call for negotiations.
"Correa's government does not like talking, neither when things are quiet nor when there are protests," said protest leader and governor of Zamora Chinchipe region Salvador Quishpe.
Critics of Correa, 48, accuse him of undermining Congress and the judiciary to concentrate power.
In office since 2007, he has picked fights with the Catholic Church, the banks and the media, cementing his reputation as a feisty leader determined to forge ahead with his "Citizens Revolution" in spite of criticisms from allies and rivals alike.
Despite organizer claims of big support, government officials said the march, which started in the Amazon village of Pangui, some 435 miles (700 km) from Quito, has been a failure, gathering just a few dozen people.
Opposition TV images show hundreds marching.
"It's not about how many people ... This is about the reasons to protest, and our reasons are much more important than how many people we can assemble," Cholango said. (Editing by Andrew Cawthorne)
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