Doubts around the fate of SolGold’s (LON, TSX:SOLG) projects in Ecuador have been cleared up after the country’s Constitutional Court rejected a fresh request to make mining permits subject to popular approval.
The ruling, covering the southern province of Azuay, said the petition to seek local consultation to ban mining was too broad and potentially misleading. Further, it ruled that any referendum which could result in other nationally enjoyed constitutional rights being restricted, were inadmissible.
IT’S THE SECOND TIME A REQUEST TO HOLD A REFERENDUM ABOUT MINING IS DENIED, WHICH IS SEEN AS A VICTORY FOR COMPANIES SEEKING TO EXPLOIT SOME OF THE WORLD’S LARGEST UNTAPPED RESERVES OF COPPER.
The decision follows a June verdict that rejected community consultation in Imbabura, the northern province that is home to SolGold’s flagship copper and gold Cascabel project — potentially one of Ecuador’s biggest mines.
The resolutions represent a victory for companies seeking to extract some of the world’s largest untapped copper reserves. According to SolGold, they also set a “strong precedent” for any future petitions for consultation that imply changes to the country’s constitution.
The Azuay province hosts several mining projects, including Canada’s INV Metals’ (TSX-V: INV) Loma Larga gold, silver and copper project. The Toronto-based company said late on Wednesday it would kick off its financing and permitting efforts for its proposed mine, one of five projects deemed strategic for Ecuador by the Ministry of Energy and Non-renewable Resources.
SolGold’s 100%-owned Sharug project, which the Australian miner believes has considerable potential for the discovery of a world-class orebody, is also located in Azuay.
On top miners’ radars
The Cascabel copper-gold project has piqued the interest of major miners, including BHP (ASX, NYSE:BHP). The world’s largest mining company last year acquired a 6.1% stake in SolGold, increasing its exposure to copper.
The move pushed Australia’s largest gold producer, Newcrest Mining (ASX: NCM), to up its holding in the company, consolidating its position as SolGold’s top shareholder.
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 over the next two years, significantly up from the $270 million it received in 2018.