Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Ecuador-focused SolGold (LON, TSX:SOLG) explained on Thursday the reasons why the country’s Constitutional Court rejected last week calls for a referendum on mining in Carchi and Imbabura, provinces where its flagship Cascabel copper-gold project and other exploration endeavours are located.
The Australian miner, which holds 72 mineral concessions in Ecuador through four subsidiaries, also said the ruling had made it clear that the future of mining will be determined by that country’s federal government.
Last week’s verdict, said SolGold, determined it was unconstitutional to ask inhabitants of certain provinces about the matters relevant to other areas. It also decided that mining was a matter of national interest, and hence could not be opined upon by the inhabitants of a particular province.
Last week’s verdict determined that asking inhabitants of certain provinces about the matters relevant to other areas is unconstitutional
Under Ecuadorian law, individuals can put forward petitions to include questions in a future vote. They must gather signatures from 10% of the voting population in the province concerned.
The court then gathers arguments from those who put forward the referendum, as well as those that opposed it.
The miner said that representatives of government bodies, regional communities, pro-mining group and members of the Cascabel community came forward to demonstrate their opposition to the petition.
“SolGold understands that the court decision has set a precedent of significantly higher standards and legal robustness if future popular consultation (referendum) requests are to pass firstly the tests of procedure and form in order to be secondly considered by the court on substance or merit,” it said.
The company already had the Ecuadorian government’s backing. Earlier this month, energy minister Carlos Pérez stated that Cascabel had the potential to become the world’s largest underground silver mine, third-largest gold mine, and sixth-largest copper operation.
“SolGold is committed to building an integrated explorer, appraiser and miner in the copper industry in Ecuador, and enjoys the support of its major shareholders, including Newcrest and BHP,” it said.
While Ecuador has gained ground as a mining investment destination in the past two years, existing and future projects risk delays and potential halts due to growing local opposition to the extraction of the country’s resources, a report by Fitch Solutions Macro Research shows.
As mining projects face headwinds from rising tensions, investors’ courage will be tested, the study concluded, which could thwart Ecuador’s plan to attract $3.7 billion in mining investments in the next two years, up from $270 million in 2018.
