Ecuador steps up fight against corruption in the mining sector

Ecuadoran prosecutors and law enforcement officers raided offices of the mining department and regulatory agency Arcom in a move that could mark a milestone in confronting corruption and correcting the problems affecting the industry.

“The ongoing investigation and the court order for the search put into perspective what is happening in the sector,” former deputy mining minister Fernando Benalcázar told BNamericas.

Suspicions about irregular concession approvals and links to illegal mining have been rife for years.

Tuesday's raid was part of a preliminary investigation linked to alleged irregularities in the concessions and permit system for new processing plants for small miners.

Between 2019 and 2024, 652 mining concessions were issued irregularly and the number of processing plants shot up, reports say. Many plants “processed gold material without verifying the traceability and origin of the mineral,” according to a document the attorney general's office sent to Pichincha's provincial administration, which also governs Quito.

The mining registry has remained closed since 2018, meaning concessions cannot be granted to private companies.

The document also mentions a lack of control in the granting of export licenses and certificates, "which would lead to the laundering of gold material."

With the raid, law enforcement sought to secure information from storage devices and documents to prevent its destruction or disappearance.

Benalcázar said police should also raid provincial offices of the department and Arcom, since local officials manage concessions in their respective jurisdictions.

Energy and mines minister Antonio Goncalves and interior minister Mónica Palencia supported the raid and offered their help in eradicating corruption.

“This is an opportunity to make transparent what is happening in the mining sector once and for all,” Diego Ocampo, who was deputy mining minister between May and August, told BNamericas.

CONTROL

Following allegations of irregularities related to mineral export certificates and bribe taking in August, energy and non-renewable resources regulator ARCERNNR removed 19 officials from the units that oversee the mining, hydrocarbons and electric power sectors. It also ordered export permits to be processed in Quito and not in provincial offices.

To tighten control, the government of President Daniel Noboa separated ARCERNNR into Arcom, electric power agency Arconel and hydrocarbons regulator ARCH.

All agencies were due to be operational in August, but Arcom still has not enough staff.

"Whom does it serve that Arcom is not functioning, and that it is not strong, technically advanced and has no suitable personnel? That benefits the consolidation of illegal mining," Ocampo said, and suggested the irregular granting of the concessions now being investigated could be related to illegal mining.

The investigation should serve to make everything transparent and promote the implementation of a robust control agency, which is urgently needed, Ocampo added. He said when he entered office, he found that around 500 complaints about illegal mining had not been dealt with by the control agency.

Ocampo claimed that organized crime controls illegal mining in Ponce Enríquez in Azuay province, as well as in Imbabura, Esmeraldas and Napo provinces.

Mining department statistics show that illegal gold mining takes place in 19 of the country's 24 provinces, highlighting the need for stronger control and regulation capabilities.

A study by political risk consultancy Prófitas found that illegal mining has expanded due to institutional weakness, corruption, ambiguous and late legislation, the closure of the mining registry, restrictions on formal activities, rising mineral prices and the proliferation of criminal organizations.