'Ecuador is one of the nations that will supply critical minerals in the future'

A series of events have renewed expectations for Ecuador’s mining sector, despite issues such as social conflicts in areas where some projects are located.

Recently, Canada’s Solaris Resources announced an investment of US$3.5bn in its Warintza copper project, a judge rejected an injunction request filed against the US$300mn Curipamba polymetallic project and Australia’s SolGold finalized financing of US$750mn for Cascabel, its US$4.2bn gold and copper project, among other developments in the sector.

Despite having only two industrial-scale mines in production, four projects should begin production by 2034 and there are several initiatives at various stages of exploration, so the South American country aspires to become an important supplier of essential minerals for the energy transition.

BNamericas speaks with former deputy mines minister Fernando Benalcázar about the latest developments, the most attractive projects and the obstacles that still need to be overcome.

BNamericas: What effects could Silvercorp's announcement regarding the acquisition of Adventus have on Ecuador's mining sector?

Benalcázar: It's excellent news, especially for the Curipamba project, which despite the injunction request never stopped. 

Editor’s note: The request was rejected on July 24 but the plaintiffs appealed.

The completion of the purchase of Adventus shares by Silvercorp may generate interesting future developments in Ecuador, considering events such as the announcement about the acquisition of mining concessions [the Valle del Tigre gold-copper project of Somerset Minerals] that Barrick will complete in Ecuador for exploration in areas neighboring Fruta del Norte; BHP's participation in the Cascabel project; Newmont's presence in the country, via the Fruta del Norte mine, through a previous acquisition of Newcrest; and finally the opening of Enami EP to sign contracts with private companies for new exploration.

BNamericas: Will this decision by Silvercorp also strengthen the portfolio of copper and gold projects, given that Adventus previously acquired Luminex, which had important projects?

Benalcázar: Of course, it's a very interesting and attractive portfolio.

The acquisition by Adventus of Luminex's portfolio confirmed that exploration and preliminary results make Ecuador look like a very attractive destination for critical minerals, especially copper.

Although Silvercorp is a Canadian company, its capital is 100% Chinese, and this company is betting on Ecuador, attracted by the possibilities that the country offers. Its interest in projects that have advanced in exploration is clear proof of that. Silvercorp has sought to enter Ecuador for several years.

Additionally, it's important to take into account Luminex's strategic partnership, with a 50% share, with Anglo American in the Pegasus [copper, zinc, gold and lead] project in the province of Cotopaxi.

Anglo American recently announced to the deputy minister of mines, Diego Ocampo, its decision to leave Ecuador in the next 100 days, ceding, free of charge, its 50% stake in Pegasus to Enami.

BNamericas: How attractive can this assignment be if Enami can't develop the projects due to lack of resources?

Benalcázar: Enami doesn't have capital, but by having concessions it can continue looking for strategic partners, as it has already done with three exploration contracts.

This gives Enami's portfolio the possibility of continuing to attract investments, which the government has proven to be very effective.

BNamericas: What lessons does the exit of companies of Anglo American's caliber leave for the country?

Benalcázar: More than the country, the companies themselves. They have to look for strategies to consolidate themselves in Ecuador.

I think that, on the social issue, some companies, including Anglo American, think that in Ecuador they can apply model that they use in other countries, which is wrong.

The Anglo American model is spectacular on social issues but Ecuador has its own characteristics of instability, insecurity [crime] and uncertainty, which is why it requires specific social and environmental policies.

Anglo American learned from the experiences in Ecuador, where it decided not to continue.

BNamericas: What are currently the most attractive projects in Ecuador in which big players in the industry are participating or could participate?

Benalcázar: Cascabel, a world class project, in which BHP has an interest.

Barrick signed a commercial agreement with Enami to explore 40,000ha in the area neighboring the Fruta del Norte mine, and recently announced the acquisition of the Valle del Tigre concession, also near Fruta del Norte.

This participation of Barrick in the area is also interesting because in Fruta del Norte, Lundin Gold's mine, there's also Newmont [which has 32% of Lundin], another of the big mining players.

In the coming weeks, Solaris will present the prefeasibility study for Warintza, under Canadian NI 43-101 standards, which reveal that it is indeed a world class project, which can make it very attractive for companies of the caliber of BHP, which is already present in the country.

In Ecuador there are interesting moves by the big mining players, but let's not forget that the success of mining always depends on the results obtained by junior companies, as is the case of SolGold with Cascabel, an extremely attractive project.

The presence in Ecuador of large players such as BHP, Newmont and Barrick is confirmation of the geological importance of the country, which is one of the nations that will supply critical minerals in the future.

BNamericas: What are the main obstacles that companies in Ecuador must overcome?

Benalcázar: I think that what has been experienced with the La Plata project is a clear example of the conflicts and difficulties that exist in Ecuador.

On Friday [Aug 2], the hearing is scheduled to be held in which the ruling should be issued regarding the injunction filed against the project.

In this case, it's important to highlight that the injunction was presented by several people and is supported by Conaie [the largest indigenous organization in the country], anti-mining NGO Frente Nacional Antiminero and the farmers of Cotopaxi province, among others.

The lawsuit was filed against the environment ministry, the Presidency of the Republic, the attorney general's office, the energy and mines ministry, the defense ministry and the interior ministry. It's a very complex claim, which is why the process has already taken months.

BNamericas: La Plata could be the fourth large-scale mine in Ecuador. Will it be able to advance despite the problems?

Benalcázar: I know that the company is committed to continuing its investment in Ecuador because [operator] Atico Mining continues to trust in the project.

La Plata is aimed at exporting copper and zinc concentrates, with quite interesting grades of gold and silver.

The mine will be underground and will be the first operation in Ecuador that processes filtered tailings.

Once the legal obstacle has been overcome, I believe that La Plata will have the environmental license towards the last quarter of 2025.

BNamericas: Enami is opening up private investment for exploration, will this bring better prospects for the country?

Benalcázar: It's a very important step. It opens the way for other international companies with high investment capacity to work on new exploration projects, which is essential for Ecuador's development as a mining country.

It's evident that the three contracts Enami has signed with private companies so far facilitate investment in exploration.

And that opening role of Enami goes further. It's important to highlight that the company's management is working with the central bank to initiate processes for the purchase and marketing of gold from artisanal mining concessions, which have the respective permits. This is also a very important step within the mining industry.