Ecuador, one of the hottest destinations for copper prospectors, aims to more than double the value of mining to its economy by 2021, but projects risks delays and potential halts due to growing local opposition to the extraction of the country’s resources.
According to the latest report by Fitch Solutions Macro Research, the ongoing expansion of mining exploration in the South American country is raising the risk of tensions between companies and the local population.
In two landmark cases last year, Ecuadorian courts sided with rural and indigenous communities who argued the national government had failed to inform them it was setting aside parts of their territories for mineral exploitation. That, Fitch Solutions notes, is a right protected by the 2008 Constitution.
A judge in the Sucumbios province, near Colombia, banned mining activity in 52 concessions, and banned another in the southern province Azuay; a gold- silver project called Rio Blanco, owned by China’s Junefield Resources.
The Rio Blanco case sparked encouragement for a new lawsuit from the Cotacachi government against the Ecuadorian government for granting concessions in Los Cedros, part of the Intag Valley, without prior consultation. In November 2018, the local government requested an injunction on mining activities.
“Projects throughout the country could be at risk of delays and potential suspensions should it come to light that mining concessions were granted in a similar fashion (without prior consultation),” the report warns.
In recent decades, the Intag Valley has seen some of the sternest opposition against mining in Ecuador, a country rich in gold and other minerals in addition to copper.
Since 2008, an estimated 1.8 million acres of the nation’s protected forests have been made available for mining exploration, according to the Rainforest Information Centre, an environmental non-profit based in Australia.
The state has the right to extract minerals regardless of whose land they are located under, according to the constitution and Ecuador’s national mining plan. However, projects in protected forests are subject to strict environmental standards supervised by the Ministry of Environment.
The higher risk of operating in Ecuador will sustain the trend of junior miners leading exploration in the country, Fitch Solutions predicts.
“Industry heavyweights will take less risky positions by entering into joint ventures or investing in juniors to gain exposure to projects as they progress down the pipeline,” the report says.
An example of such a trend is the Cascabel copper-gold project, owned by junior SolGold (LON, TSX:SOLG). Both BHP and Newcrest Mining have increased their share positions in the miner to gain exposure to the potentially world class project.
As mining projects face headwinds from rising tensions, the courage of investors will be tested, the analysts conclude, which could thwart Ecuador’s plan to attract $4 billion in mining investments by 2021.
6 Comments
John Cracker
Gee, I wonder why .They (mining corporations) pay off/corrupt the national government. They make a mess of the locals daily lives. Then, to top it off, they leave a giant fvcking mess behind for the locals to deal with/
Why would these locals not welcome, with open arms, these corporate slobs?
Matt
When are mining companies and governments going to fully understand that the Indigenous are behind mining projects for the most part but WANT to have consultation in advance (FPIC) . By consultation they mean economic involvement and environmental safeguards……nothing that is onerous.
18wheel
No, they’ve been infiltrated and indoctrinated with communism – the irony being that communist states have the worst environmental record (but way less protestors hanging around)
Karin Hall
United States military is taking over Ecuador so everything should work out just fine for big mining companies…Not so great for world’s greatest hero Julian Assange however.
Anon-Y-Mous-e
Top pick for 2019 in Ecuador is Lucky Minerals see http://miningmarketwatch.net/lky.htm Remarkable news flow on tap on ground Aurilean would be proud of
Miroslav
I was working in exploration in Ecuador twice in my carrer – 1993-1996 and 2007-2008 and nothing change between those two periods and I can asure you all that nothing will change for modern mining in that country in next 20 or more years. Since 2008 Ecuador is NO GO mining region in my perception and any investment in exploration will be wasting your monies and time. Their politicians are just plain stupid ignorants who was no idea what XXI century mining is about. Period.