Ecuador looking to advance mining projects before govt ends

The government of Guillermo Lasso, which ends in October or November, is striving to progress with some mining projects so final decisions can be made by Ecuador’s next president, who will be elected August 20.

According to official information, only around 10% of Ecuador’s territory has been explored, implying significant potential for new discoveries.

BNamericas speaks with the energy and mines minister, Fernando Santos, about the status of some projects and other matters.

Santos says mining, in the future, will replace oil as one of the country’s main exports.

BNamericas: How far will mining processes advance during the remainder of the government?

Santos: We are continuing negotiations with SolGold so it can begin construction of the Cascabel mine.

We are analyzing with them the economic issues and the amount of royalties. According to the law, royalties must be between 5% and 8% of production.

It is believed that Cascabel is one of the largest mines in the world that is not yet in production, so there will be a very strong economic injection for the provinces of Imbabura and Esmeraldas.

BNamericas: Is SolGold planning to build a mineral pipeline?

Santos: That's right. They would take the material through a pipeline, which they will build themselves, to the port of Esmeraldas.

Cascabel is a project that will require an investment of about US$3bn, which we are looking at very carefully.

SolGold has very good relations with the community. It has done very important social and environmental work in the area. We’re very excited that they can move to the production stage.

BNamericas: Can you foresee any progress for the Ruta del cobre project?

Santos: The operating company [Ruta del cobre , a subsidiary of Grupo México] is analyzing the Chaucha deposit, which is very large but has some problems because some water courses have to be diverted, which makes it a very expensive project.

Company executives visited us and told us that they are carrying out a final evaluation study to see what decision they make regarding the future of the project, but some of the partners would be interested in continuing.

BNamericas: What about the Llurimagua project?

Santos: Although [Chilean state copper company] Codelco filed an arbitration case against Ecuador asking that the commitment dating from 2008 for the partnership between that company and Ecuadoran state company Enami for the development of the project be fulfilled, we continue in talks to search for an agreement.

BNamericas: But a court removed the project's environmental license months ago

Santos: Yes. The Imbabura court withdrew their license for procedural reasons but left the door open to request it again in accordance with the new environmental consultation regulations in force.

However, this is not the time to hold the consultation until the main issue is resolved, which is the partnership between Enami and Codelco.

BNamericas: Will there be any progress on Mirador Norte?

Santos: We are processing the extension of the Mirador contract for the development of the Mirador Norte deposit, which could double [copper] production .

At the moment we’re negotiating the amount of the investment.

EcuaCorriente, the operator of Mirador, is a serious company that has fulfilled its obligations, so we believe that there will be no problems in the negotiations.

BNamericas: Is there any expectation that the prior consultation law – required by some mining projects – will be passed during this government?

Santos: There is already a draft law on prior consultation that is with the presidency but the opportune moment must be sought because it’s not only for mining but for all extractive sectors.

For example, in terms of oil, the southeast has not been explored much and the existence of deposits in the contiguous Peruvian zone makes it very promising.

Likewise, several mines require this law, which must be highly consensual and dictated in an atmosphere of tranquility.

There is the possibility of leaving the bill for the next government to pass.

In terms of mining, the country is extremely rich. Mining is going to replace oil, but we need a higher level of consensus among all stakeholders.

At the right time, the prior consultation law will lead us to that consensus.