The challenges Ecuador's mining sector faces

Mining in Ecuador has vast potential, but red tape, legal certainty, and social opposition prevent it from realizing that potential, BNamericas was told.

“This government has fallen far behind. It has been in office for nine months and is only just beginning to review investment requests from four years ago, when the cadastre was closed,” Walter Spurrier, president of consultancy Grupo Spurrier, told BNamericas. "The biggest problem is the extreme slowness with which they have been working."

However, at least nine projects will advance, Spurrier said, although production start at some could take longer than initially planned. 

A recent study Grupo Spurrier conducted for the mining chamber and shared with BNamericas projected nine advanced mining projects, two producing mines, and one that has suspended production due to social problems have reserves of 37.1Moz gold, 45.5Blb copper, 178Moz silver, and 129Mlb zinc.

The two producing mines are Lundin Gold's Fruta del Norte gold mine and EcuaCorriente’s Mirador copper mine. Ecuagoldmining's Río Blanco project is paralyzed.

The nine advanced projects are Loma Larga, Cascabel, Ruta de Cobre, Panantza-San Carlos, Llurimagua, Cangrejos, Cóndor, Curipamba, and La Plata.

Spurrier added these projects would generate tax revenues of some US$2bn a year, in addition to the US$350mn in royalties that would go to works in surrounding communities.

According to experts, the projects could spawn new ones, as exploration remains insufficient and Ecuador has large prospective areas in which foreign companies have shown interest.

However, recent decisions such as approving a popular consultation on mining in rural Quito, legal measures to stop mining projects, and reforms prepared by the national mining assembly, among others, could delay some projects and potential development.

Mining lawyer Elisa Morán told BNamericas that the main challenges for Ecuador's mining sector are legal certainty, sustainable development, productivity, and competitiveness.

Photo: Fruta del Norte mine