Contracts with Ecuador's state miner spark industry optimism

Private players are increasingly interested in signing commercial contracts with Ecuador's state mining company Enami EP.

New exploration has been facilitated through commercial contracts between private companies and Enami EP and efforts by the mining department to modernize regulations and facilitate processes, among others.

Authorities, legal experts, academics and company representatives analyzed regulatory, infrastructure, social and investment roadblocks still to be overcome at an event in Quito, hosted by Universidad Tecnológica Equinoccial's mining innovation laboratory.

“Investments in mining are essential. We have had some difficulties in previous years, but we see that work is being done at an accelerated rate to reduce the gap in governance for the sector,” former mining minister Rebeca Illescas, who heads the laboratory, told the event.  

Recently, the government signed a mining contract with Australia's SolGold for the US$4.2 billion Cascabel project, Canada's Solaris Resources announced a US$3.5bn investment in its Warintza copper-molybdenum porphyry project and a court dismissed a legal action against the US$300 million Curipamba polymetallic project.

Angel Chávez, operations manager at Hanrine, the local unit of Australia's Hancock, said the company set up shop in Ecuador because the country has abundant mineral resources and wants to do things right.

"Despite existing problems, we see it as an opportunity," he said.

The chairwoman of the mining chamber, Carolina Orozco, emphasized that the sector needs state policies, that the resources the activity generates need to be distributed among mining communities, that legal certainty and physical security must be guaranteed, and that there is a need for environmental and prior consultation laws that help advance projects.

Concessions have not been issued since 2018, when the mining cadastre was closed, but Andrés Donoso, a lawyer at Robalino Law, highlighted that contracts with Enami EP constitute a robust mechanism with clear benefits while the cadastre is not operating.

But even if it is reopened, Enami should continue signing contracts because they generate resources for the State immediately and once exploration begins, Donoso said.

Enami EP has signed contracts with three companies since September 2023, involving investment commitments of US$170mn for exploration of 110,000ha across the country.

The agreements are supported by provisions in the constitution, the mining law and the public companies law, which authorize Enami EP to associate with companies to obtain exploration capital while retaining ownership of the concessions. Enami EP has a preferential right to request concessions for new areas or access those where the rights of the previous owners have been extinguished.

In accordance with regulations, the contracts determine the mining potential, assignment and transfer of Enami EP's mining titles.

Contracts for small projects apply to areas of up to 5,000ha and for medium and large ones to up to 40,000ha.

The transfer of medium and large-scale mining titles, which Enami EP may handle directly, can only occur during the advanced exploration stage, after economic evaluation of the project in line with international standards and compliance with the obligations defined in the agreement.