Since taking office a year ago, President Guillermo Lasso has placed his chips firmly on mining to bring the investment and jobs needed to revitalize Ecuador's economy.
Under an action plan launched in August 2021, the government set out a wide-ranging to-do list to get the sector moving, from speeding up permitting and reopening the claims system to convincing a sometimes-skeptical public of the benefits mining can bring.
The government's aim is to push five priority projects - Atico Mining's (TSXV: ATY; US-OTC: ATCMF) La Plata; Dundee Precious Metals' (TSX: DPM; US-OTC: DPMLF) Loma Larga; Adventus Mining's (TSXV: ADZN; US-OTC: ADVZF) Domo; Lumina Gold ?s (TSXV: LUM; US-OTC: LMGDF) Cangrejo and SolGold's (TSX: SOLG; LSE: SOLG) Cascabel) - into construction by the time it stands down in 2025.
It's a tall task, but Ecuador is not starting from scratch. The country's two first industrial-scale mines (Ecuacorriente's US$1.4-billion Mirador copper mine and Lundin Gold's (TSX: LUN) US$700-million Fruta del Norte operation) entered production in 2019 and a slew of majors and minors have been scouring the country for a decade.
Progress slowed amid a rise in anti-mining protests, bureaucratic and legal tangles and then a devastating pandemic., but things have started to change.
Environmental licences, which once took close to two years to approve, now take less than a year, according to Andres Ycaza, a mining lawyer and partner at Quito-based Flor, Bustamante, Pizarro & Hurtado Abogados.
Access to authorities has also improved (the Ecuadorian Mining Chamber has met with President Lasso four times since he took office), and the appointment in April of mine engineer Xavier Vera as Minister of Energy and Mines, a post usually held by oilmen, also bodes well for the sector.
Lasso's efforts have not gone unnoticed. In the Fraser Institute's annual survey of mining companies released in April, Ecuador's score jumped to 72.79 points, making it the most attractive country in South America.
That's partly due to increased political uncertainty in Chile, Colombia, and Peru, but also real progress made in Ecuador over the last year.
In May, the Environment Ministry granted an environmental licence to Atico's La Plata underground gold project, which could begin construction next year. Similar announcements are expected on Loma Larga and Domo in the coming weeks.
The government has also signed pioneering investment protection agreements with Lumina Gold and SolGold, offering legal certainty while the companies advance their projects in return for guaranteed investments totalling almost US$500 million.
Development of these two large projects would put Ecuador firmly on the map as one of South America's leading mineral producers. According to a prefeasibility study published in April, a US$2.7-billion underground project at SolGold's Cascabel could produce almost 200,000 tonnes of copper, 680,000 ounces of gold, and 1.3 million oz. silver annually during its first five years in production.
And while its registry of mining property remains closed since 2018 following pressure from Indigenous communities, Lasso's government has now begun to process applications made before the suspension. It could reopen to new applications by the end of the year, Guillermo Flores, executive director of mining and energy regulator ARCERNNR, told The Northern Miner.
With dozens of mining companies already in Ecuador and others waiting to get a foothold, that could trigger a rush for claims and this time the agency will have the systems and staff in place to ensure transparency and greater legal certainty, some industry observers say.
In the meantime, President Lasso has ordered state mining company ENAMI EP to seek investors to develop its extensive portfolio of mining claims.
"We have a huge number of opportunities from a geological point of view that we can offer," says ENAMI executive director Julian Agurto. The company is also working to resolve a dispute with Chile's Codelco, currently in arbitration proceedings, which has snagged the giant Llurimagua copper project.
A greater challenge will be tackling illegal mining, a scourge in many parts of South America, which often leaves a trail of violent crime and environmental degradation.
Lasso has promised to eradicate the problem, which taints public opinion about legal mining, but Flores admits his agency lacks the necessary manpower. A raid last February by police and inspectors on a gold rush in the Ecuadorean rainforest seized almost 150 backhoes.
Environmentalist and Indigenous movements that oppose mining in large parts of the country remain a potent force. Yaku P?(C)rez, an anti-mining activist, won almost as many votes as Lasso in last year's election and the Pachakutik Indigenous party he represented is the second largest bloc in the National Assembly.
In a referendum last year, residents of Cuenca, Ecuador's third largest city, voted overwhelmingly to ban mining near local watersheds, including part of Dundee's Loma Larga project (although a court has said the result is not retroactive). Activists are now collecting signatures in Quito to hold a similar vote on the 2,860-sq.-km Choco Andino, a UNESCO biosphere reserve.
Environmentalists have also become adept at using the courts to block projects. In December 2021, the Constitutional Court revoked the permit granted to Cornerstone Capital Resources' (TSXV: CGP; US-OTC: CTNXF) Rio Magdalena project in northwest Ecuador, arguing that proper consultations had not been carried out.
But while some view these rulings as setbacks, others, including some lawyers, see the courts as clarifying the rules for mining companies in the face of deficient or absent legislation. Following a mandate from the Constitutional Court, the government is readying legislation to regulate the consultations that must be carried out for investment projects near Indigenous lands.
Meanwhile, industry advocates hope that the economic benefits of mining will help to shift public opinion. With just two mines in production, minerals are already Ecuador's fourth largest export behind oil, shrimp, and bananas. A study commissioned by the Ecuadorian Mining Chamber found that developing the 12 most advanced mining projects would attract US$16 billion of investment and add 1.2 million jobs by the end of the decade.
The impact is even greater on the ground. Development of the Fruta del Norte and Mirador mines has transformed the southeastern province of Zamora Chinchipe from a sleepy backwater into one of Ecuador's most dynamic economies, with hundreds of new jobs and businesses created over the last five years. Average incomes in the Yantzaza district, home to Fruta del Norte, are now the third highest in country, behind Quito and Guayaquil.
People elsewhere in the country would like to share these benefits, Ycaza says.
"This romantic environmentalism, which has won votes in recent elections, has lost momentum," he says.