Despite having just 6.93% of its territory under mining concessions, of which 1.57 percentage points are in production, due to its location in the Andean Copper Belt, Ecuador aspires to become an important player in the sector.
According to the mining cadastre, there are 2,042 artisanal mining permits, 475 medium and large-scale mining concessions and 983 small-scale concessions.
Ecuador has only two large-scale mines in production: the Mirador copper operation and the Fruta del Norte gold mine, but experts say it has significant mineral riches yet to be discovered.
Former mining undersecretary Fernando Benalczar says in this interview with BNamericas says that the situation in countries such as Peru and Chile, where new regulations or taxes for the mining sector may apply in the short or medium term, as well as the social upheaval in Colombia, offer unprecedented opportunities for Ecuador.
BNamericas: Why do you think Ecuador can be an important player in the mining industry?
Benalczar: Ecuador has an important and long mining history. The geological richness of Ecuador is proven and evidenced in big recent discoveries, and other prospects that are underway that make it the ideal destination.
Just 6.93% of the Ecuadoran continental territory is concessioned for mining; of this percentage, only 1.57 [percentage points] are in the exploitation phase and 5.36 in exploration. In comparison, 20% of the continental territory comprises national protected areas, which confirms the importance of the environmental issue for the State.
BNamericas: Investment in the mining sector is still incipient. Can it be strengthened with the opening of the cadastre?
Benalczar: The mining sector has established itself as the sector that has attracted the most foreign direct investment. In the 2016-20 period, investment in the sector totaled US$2.16bn, 45.4% of the total received by the country.
From 2016 to early 2018, investment commitments of US$1.3bn were agreed through 2022, for initial exploration on 275 concessions granted through processes.
Of the US$560mn projected to be invested between 2017 and 2020, US$343mn could not be invested due to delays in administrative processes and the COVID-19 pandemic.
In 2020, mining saw the highest growth in exports at 182% compared to 2019, despite the pandemic.
As soon as the mining cadastre is opened, there are 63 areas for auction, which are in the process of being awarded and which could mean additional investment of US$120mn.
BNamericas: What does the mining sector expect from the Guillermo Lasso government, which took office on May 24?
Benalczar: The government led by President Guillermo Lasso has generated very strong expectations of reactivation and economic growth, based on an aggressive and successful vaccination campaign against COVID-19, obtaining investments from the private sector and a clear decision to promote the country in the eyes of the world in search of concrete investments in the short term.
Mining is one of those drivers, although with several challenges due to the opposing positions in the national assembly and the legal discussion in the constitutional court [on popular consultations for mining] as part of a broad environmental debate in society.
BNamericas: What does the sector require to take off?
Benalczar: It’s vital to guarantee investment conditions in accordance with current international frameworks, for which firm support and strong messages of support for responsible mining are required, especially for those mines, projects and companies that have put their faith in Ecuador and have invested heavily.