Working to make mining a pillar of Ecuador's development

Ecuador is in the process of transforming its economy, and in the last couple of years has embraced the mining industry as one of its pillars of economic development.

What was once a country that viewed mining with suspicion, Ecuador has started welcoming new players, which are increasingly focusing on the Andean country as its vast mineral resources have remained largely untapped.

So what can the industry expect in the coming years? BNamericas sat down with the president of the Ecuadoran mining chamber (CME), Santiago Yépez, during a recent visit to Chile to attend the Mining Strategic Excellence seminar held by Metal Bulletin, to hear his take on the changes the industry is facing in his country, and what are some of the challenges and opportunities.

BNamericas: What's the most important change that the previous administration [of Rafael Correa] did to bring mining investment into the country?

Yépez: The creation of a mining ministry, about two years ago, created interest and a positive change. To have a mining minister focused 100% on industry issues has allowed for a number of changes to take place, especially on tax issues, which was an impediment that prevented foreign investment, and which is being untangled little by little.

We have to keep working [on this issue], but changes in the tax policy and making things more accessible have generated an increase in interest in Ecuador.

BNamericas: So it was the tax issue that acted as a barrier, holding foreign investors back?

Yépez: Without a doubt the tax issue was an entrance barrier. In addition, I believe the opening of the mining cadaster [public lands available for exploration], which had been closed since 2008 when a ban was in place, was also important. The opening of the cadaster and the handling of new concessions create important attractions for global companies, which have been coming to Ecuador in the last seven, eight months.

BNamericas: In what other areas can the country advance so the sector can continue to grow?

Yépez: As a mining chamber, we're working side-by-side with the ministry. We finally have a minister that has adopted the sector as his own, and we believe there are many changes yet to be made. For example, to consolidate the series of changes made through regulations, and reform the mining law, so it can provide more legal certainty to investors.

Therefore, the creation of a new legal framework for the mining industry is one of the pending issues and that is something that we're working with the government to achieve.

BNamericas: What is the perception of regular Ecuadorans about the mining industry?

Yépez: Unfortunately, people have a picture in their minds of small-sized miners or an industry that is less technological. So there's a challenge in the creation of good practices and responsible mining. In that sense, industrial mining attracts a lot of criticism, but also the possibility of job creation, investment and inflows in a dollarized economy that needs foreign investment.

BNamericas: The government of President Lenín Moreno is relatively new. What has been its attitude so far towards the sector and what can we expect during his administration?

Yépez: The president has expressed on several occasions that mining is one of the three pillars for the country's development. The support given by the government to the sector is important, but we also think it's important to consolidate the changes that have taken place so we can move the industry forward.

BNamericas: The fact that Javier Córdova was confirmed as mining minister, does that say something?

Yépez: It's important. As representatives of the formal mining industry, we've said that the changes made in the last two years are important and we have to keep that policy moving forward. The fact that a number of investments, as well as investment commitments, have been made is very important for Ecuador, and in that sense, the policies have to remain in place.

BNamericas: How do you see the cooperation efforts with other countries in the region?

Yépez: Cooperation is a fact and that is something that can strengthen mining development in Ecuador. We have an industry that is yet to be developed, and we can copy, in a good sense, the experiences that other countries like Chile, Colombia, Peru, Canada and Australia have, so we don't make mistakes in terms of new rules and industry development.

BNamericas: What does the chamber expect in the short to mid-term?

Yépez: We expect projects that are under construction to enter operation, which will be a milestone for Ecuador, where no mining projects of an industrial scale have started production. We also expect the consolidation of the regulatory framework so new capital can enter the country, as well as further exploration which is likely to bring new discoveries into production in the coming years.