Ecuador
Legislation
- Mining Act 2009 (as amended)
- Mining Regulations 2009 (as amended)
Regulatory Risk Rating
Regulatory Risk
Regulatory Corruption Risk
Regulatory Corruption Risk
Corruption Exposure Risk
Corruption Exposure Risk
| Regulatory Risk Rating Factors | Risk Level |
|---|---|
| First Come / First Serve | Subscribe |
| Application Critiera | Subscribe |
| Duration | Subscribe |
| Right to Renew | Subscribe |
| Competing Licences | Subscribe |
| Mineral Coverage | Subscribe |
| Right to Mine | Subscribe |
| Criteria for Mining Rights | Subscribe |
| Tenure | Subscribe |
| Surface Rights | Subscribe |
| Government Take | Subscribe |
| Transfer Rights | Subscribe |
| Change of Control | Subscribe |
| EIA Process | Subscribe |
| Power to Revoke | Subscribe |
| Age of Legislation | Subscribe |
| Other Factors | Subscribe |
For many years, Ecuador has struggled with a strong anti-mining rhetoric which has caused considerable challenges for mining companies seeking a social licence to operate. Whilst there seems to be acknowledgement that there is a substantial economic need for mining, the country has grappled with balancing this need with its environmental protection principles and the need to ensure that its citizens benefit from their natural resources. Unfortunately, the Mining Act does not offer a suitable pathway for progress, it merely represents the struggle in legislative form. This is not balance, it is a legislative framework which acknowledges the basic principles of security of investment and then persistently undermines them. Rather than use the Concession system as countries such as Chile, Peru and Dominican Republic have done – offering comfort and assurance to investors via security of tenure - Ecuador has created a system where the ‘State Licence to Operate’ will prove just as critical as the social one!
Contents
Legislation
- Mining Act 2009 (as amended)
- Mining Regulations 2009 (as amended)
Regulatory Risk Rating
Regulatory Risk
Regulatory Corruption Risk
Regulatory Corruption Risk
Corruption Exposure Risk
Corruption Exposure Risk
Overview
Ecuador’s economy is primarily based on agriculture, tourism, natural resources and fishing. Oil has traditionally been a major economic contributor and one of the country’s primary exports, alongside shrimp, cocoa and bananas.
The mining sector has been slow to develop, in spite of the fact the country is viewed as having considerable mineral wealth, with gold, silver, copper, lithium and rare earths just some of the minerals present. To highlight this, large-scale mining is relatively new to Ecuador – with only two major projects in production – a milestone which was only reached in 2019. Various factors have contributed to this slow growth, including an influential anti-mining movement, slow bureaucratic processes, permitting delays and legal challenges.
Change however may be coming. Several large projects have recently been issued with their environmental licences and two major exploitation agreements have been signed. In August 2021 the Ecuadorian government also issued Presidential Decree No. 151 which laid out the action plan for the development of the mining sector. The plan included the need for the State to generate policies which promote development of the sector and increase foreign investment, whilst also ensuring legal certainty, effective consultation processes, environmental protection, transparency and a reduction in illegal mining, amongst other things.
Whilst it is positive to hear of this progress, legal risk in the jurisdiction remains high and investors will need to focus on their ability to negotiate a comprehensive exploitation contract and address the ability of the State to interfere in their projects if they are to achieve successful outcomes in the country. A switch in government could prove fatal if the pro-mining sentiment is not present and companies will need to protect themselves from such changes over the life of their projects.
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