Column: Trump 2.0 won’t reverse Biden’s critical minerals push
Donald Trump has described the Inflation Reduction Act (IRA) as a "green scam" and vowed to repeal it after he returns to the White House in January.
Ecuador has tethered its economic fortunes to a burgeoning mining industry. Now it just needs to get bureaucrats and community leaders on board.
Local opposition and red tape are hindering plans to become a mining superpower that can rival other South American nations. Less than two years ago the government hoped mining would become 4 percent of Ecuador’s gross domestic product by the end of President Lenin Moreno’s term in 2021. That’s now under question, according to Deputy Mining Minister Fernando Benalcazar.
Mining belongs to all 17 million Ecuadorians and large projects can’t be decided by groups of people that don’t represent even one per thousand of the country
“That 4 percent is aggressive, given the conditions of radical social and environmental opposition that we have been seeing,” Benalcazar said in an interview in Quito. “Mining belongs to all 17 million Ecuadorians and large projects can’t be decided by groups of people that don’t represent even one per thousand of the country.”
Ecuador still expects that mining exports will rise to $3.66 billion in 2021 from $270 million in 2018 as the country’s first two large-scale mines start operating later this year, he said. But mirroring the growth stories of neighbors Chile and Peru, the world’s two largest copper producers, is proving hard as multiple projects face delays. International investors, some of whom have set up shop in Ecuador over the last two years, have complained publicly that they face difficulties.
That was a common theme in the stories that mining investors and prospectors in Ecuador shared during a session at the PDAC conference in Toronto earlier this month, Benalcazar said in the interview last week. “They keep having problems, even if they have seen substantial change in environmental licenses, there are still delays in things like water permits.”
As a result, about 40 percent of the $1.25 billion in mining investments expected for 2018 never made it into Ecuador, Benalcazar said. The government is in the final days of completing a new policy that will mirror that of countries with greater mining experience in order to streamline procedures and increase Ecuador’s competitiveness.
They keep having problems, even if they have seen substantial change in environmental licenses, there are still delays in things like water permits
The government has been collaborating with officials in Canada and is starting conversations with Chile to boost prospecting in the more than a third of the country that remains unexplored, he said.
Among the projects that have faced delays is Tongling Nonferrous Metals Group Co.’s Mirador copper mine, in Chinchipe province. The mine has reserves of 30.2 million tons of copper and would be churning out 344,000 tons of concentrate per year. It was initially supposed to start producing in 2016, but construction was suspended after environmental and indigenous organizations alleged subsidiary ECSA had committed human rights abuses.
The mine, which resumed construction earlier this month, will start operating at the end of year, Benalcazar said. Still, in a report Wood Mackenzie highlighted the risk of more delays and estimated it could start during the first quarter of 2020.
Meanwhile, the Constitutional Court has allowed a referendum on mining activities in three jurisdictions to go ahead on March 24. A vote against mining near Cuenca would threaten INV Metals Inc’s Loma Larga copper, gold and silver project.
The government is also working on a legal strategy to allow the development of Junefield Mineral Resources Holdings-owned Rio Blanco gold mine. The project was halted in May after a group of protesters took over the site, burned the mining camp and damaged access roads. A court subsequently ordered the company to stop construction. The mine could start producing in just four months, if building could resume, Benalcazar said.
To be sure, Lundin Gold Inc.’s Fruta del Norte gold mine is scheduled to start operating at the end of the year and other multinational mining companies are looking at Ecuador with interest, he said. Dundee Precious Metals Inc. will begin investing in Ecuador through junior miners already operating in the country, while Barrick Gold Corp. Chief Executive Officer Mark Bristow has visited the country several times, Benalcazar said.
Anglo American Plc signed an earn-in joint venture agreement with Canada’s Luminex Resources Corp. on three exploration projects. BHP Group, the world’s biggest miner, has agreed to invest about $75 million exploring for copper on a deposit owned by Luminex. BHP has been looking to increase it exposure the metal and has targeted Ecuador as a key jurisdiction for that growth.
“Ecuador’s economic future is based in mining,” Benalcazar said. “We’re not a potential destination anymore, we’re the country where any large-scale mining company needs to be.”
(By Laura Millan Lombrana and Stephan Kueffner)
