Over the last decade, more gold and copper have been found in Ecuador than anywhere else on earth and in recent years the price of gold has skyrocketed. This has led to growing interest in the country from several of the world’s largest mining companies, including BHP, Newcrest, Anglo American, Fortescue, Codelco and First Quantum.
Today, Ecuador only has two large mines in production: the Cóndor-Mirador a USD 1 billion copper mine run by the Ecuadorian-Chinese company; and the USD 692 million Fruta del Norte gold mine, operated by Canada’s Lundin Gold.
An executive at Lundin Gold explains, “Large-scale mining is new for Ecuador, it is not like Peru or Chile. The state is indifferent, they recognise the importance of strategic mining projects but if there is any conflict, they sit on the sidelines.”
“Large-scale mining is new for Ecuador, it is not like Peru or Chile.”
Executive, Lundin Gold
There are many projects in various stages of exploration and environmentalists are growing concerned, citing the rights of nature enshrined in the constitution – even Leonardo Di Carpio has spoken out against mining in Ecuador. At the same time, the country is facing steep economic challenges and the potential income from mining royalties is moving from attractive towards essential.
There is particular concern around the Rio Magdalena project in the Los Cedros Reserve, Imbabura – the municipal government claims that no prior consultation was made before the environmental permit was awarded to ENAMI, Ecuador’s state-owned mining company. If a judicial ruling is ratified by the Constitutional Court, the project could be permanently suspended and put at risk 540 other mining concessions that intersect forests or nature reserves.
A partner at a law firm that has previously worked for Anglo American in Ecuador tells us, “There is a high risk that the Constitutional Court will continue to make decisions that limit mining development. Paradoxically, Ecuadorians cry out for high quality jobs and responsible development. We are close to an exit parade of serious and responsible investors who are only asking for legal security. If big miners are driven out of the country, they will be replaced with illegal mining.”
“There is a high risk that the Constitutional Court will continue to make decisions that limit mining development.”
Partner, Ecuadorian law firm
The coming months and years will be critical to defining Ecuador’s mining future. Will the country embrace the sector and work to ensure high quality and responsible mining projects or will it prioritise the preservation of its natural assets?
The government must come off the sidelines and make these hard decisions – elections are rapidly approaching, perhaps there will be more clarity soon.