Ecuador's 2025 elections and the impact on mining

The progress of Ecuador’s mining sector in 2025 will be linked to the presidential and legislative elections in February.

There are 16 presidential candidates, with incumbent Daniel Noboa and former president Rafael Correa's ally Luisa González leading the polls.

The largest mining investment next year is expected to be the start of construction of Curipamba, a medium-sized polymetallic project whose latest estimated capex is around US$250mn. It will be Ecuador's third industrial-scale mine. 

Curipamba could pave the way for other projects such as Atico Mining’s La Plata, also a medium-sized initiative, as well as Warintza, Cascabel and Cangrejos.

BNamericas speaks with former deputy mining minister Fernando Benalcázar about the near-term prospects of Ecuadoran mining. 

BNamericas: How do you see the prospects for the mining sector in 2025?

Benalcázar: SilverCorp will begin construction of the Curipamba mine [in which Salazar Resources also has a stake] on a firm footing in 2025, while Lumina Gold will sign the mining contract for the Cangrejos project with the Ecuadoran government, meaning that construction of the mine should begin in 2026 or 2027.

As with any major infrastructure project, there will be opposition, especially from groups that have tried, in various ways, to stop the Curipamba project, but President Daniel Noboa's position is to support investors who are in the country, in line with what he offered in March at the PDAC conference and later during his official visit to Canada in September.

With the president's firm stance, the military will always support the projects to avoid problems, as was already seen at La Plata, which will continue with the licensing process in 2025.

At least until May, Atico will continue to work very closely with the government to advance environmental licensing as much as possible.

One area where progress will be seen is in the commercial contracts that the Ecuadoran state-owned company Enami has signed with private companies, although this will depend on the reopening of the mining registry because, except for the case of Hanrine [a unit of Australia’s Hancock], the other contracts, signed with Barrick and Solaris, depend on the ability to map and delimit the zones.

BNamericas: In October, President Noboa gave a 90-day deadline to update the registry. Will that help combat illegal mining?

Benalcázar: At the moment, the environment ministry is working hard on environmental matters to overcome deadlocks in the issuing of permits or licenses: definitive water permits, among others, for small, medium or large mining, which is part of the strategy to combat illegal mining because the best way to combat illegal activity is by attacking it from the legal side.

It is in the processing plants [of small miners], with the exception of one or two, where most of the illegal material is laundered.

If the law is applied, all these plants must be stopped.

BNamericas: Do you see progress on the Cascabel and Warinza projects in 2025?

Benalcázar: SolGold will continue working to deliver the Cascabel feasibility study in 2025, with which an addendum to the contract signed [in June] will be signed.

The addendum is necessary because the feasibility study will establish the details of how the project will advance, including, among others, the issue of transportation and ports.

At Warintza, Solaris will continue to aim to complete the feasibility study, and then sit down to negotiate its mining contract with the State.

BNamericas: What can we expect in terms of investment in the sector, apart from what Curipamba will require?

Benalcázar: I think that the new investment will basically come from Curipamba because the development of Mirador Norte [EcuaCorriente's project to expand its Mirador copper mine] has been compromised since the company hasn't fulfilled its commitment to build the Hidrocruz hydroelectric plant, established in the contract.

As for Lundin Gold [owner of the Fruta del Norte gold mine], the company will maintain its investment policy. Exploration and resource delineation activities will continue as planned because it’s an economically solid company and has a very well-defined program to advance its concession.

BNamericas: Will the change of government be the main challenge for the mining sector in 2025?

Benalcázar: Without a doubt, but whichever of the two leading candidates wins, they will give continuity to mining.

If there were a surprise and a third party won, it would generate a lot of uncertainty because we don’t know what they think about the mining sector.

The country, unfortunately, remains in a state of total uncertainty, political instability and legal insecurity. Uncertainty due to a lack of adequate communication has generated instability.

The fact that we have 16 presidential candidates reflects the political instability we’re experiencing.

BNamericas: How much could the electricity crisis influence the decisions of the mining companies that are operating in Ecuador and those that might come?

Benalcázar: It has already had an impact. It has helped them to clear up one of the variables of uncertainty regarding self-sufficiency.

The operator of La Plata declared that its action plan for the development of the mine includes 10MW. Cascabel in its general work and investment plan makes it clear that it needs 240MW, so it will seek self-supply with projects that are being developed or to be developed in the area and will include photovoltaic energy, and Silvercorp is also clear that it will have to have self-generation to avoid production problems if there is a drought when they have finished building the mine.

The message is very clear: climate change has made itself present in a hydrological drought [Ecuador depends on hydroelectricity]… and that is why experts say that rains are needed for two months.

No good manager or planner would invest millions if they don't have a reliable power source and the proper permits.

What's clear is that investors will wait to find out who the next president will be before making any important decisions.

If Noboa wins, I think there will be pleasant surprises for the three strategic sectors [mining, electric power and oil & gas], but if he doesn't win, we will return to the uncertainty of not knowing what will happen to the country.

BNamericas: In the legal and security environment, what are the main risks and strengths for the mining sector?

Benalcázar: I would say that, in terms of security, despite constant criticism, the greatest strength at the moment is the political decisiveness of the president, which together with the support of the armed forces and police, has achieved conclusive results, such as arresting leaders of criminal gangs, dismantling structured criminal organizations and declaring the existence of terrorist groups.

What worries me is the issue of kidnappings, which is the worst enemy we can have, and the vacunas [extorsion payments demanded by criminals to allow businesses to let them work], a perverse industry of the mafias, which I saw in Colombia in the 1990s. We all have a price for kidnapping and extortion.

Before we didn't consider physical insecurity, now we have to.

BNamericas: In terms of regulatory issues, do you see any chance that the national assembly will approve laws such as those on prior consultation and the environment in 2025?

Benalcázar: They have to be approved in 2025. If it's not due to pressure from the president who is elected, it will be due to social pressure.