Digging Deep: The Promises and Pitfalls of Mining in Ecuador

Bustamante begins by outlining Ecuador’s current legal framework, largely unchanged since the 2008 Mining Law reform. The law vests ownership of underground minerals with the state, which can delegate exploitation rights to state-owned or private companies through mining concessions. These are granted for 25-year periods and can be renewed. However, transitioning between mining phases – from exploration to exploitation – requires complex government approvals, environmental permits, and in some cases, lengthy contract negotiations.

The discussion then turns to key mining projects. The Mirador copper mine, which has been in operation since 2020 and run by a Chinese consortium, is Ecuador’s largest mining project, generating approximately USD1 billion in exports annually. Yet it has faced recent disruptions due to national electricity shortages. The consortium is now negotiating an extension to expand into the adjacent “Mirador Norte” area.

Another major project is Fruta del Norte, an underground gold mine operated by Lundin Gold. Benefiting from high gold prices, the project is performing well economically. The podcast outlines Ecuador’s fiscal regime for mining: companies must pay royalties (3–8%), income tax, and a unique 15% profit-sharing requirement – 12% of which goes to the state. This results in the government often receiving a greater financial benefit than the mining companies themselves.

Other promising projects include Cascabel, managed by SolGold, which has excelled in community engagement and is working toward financing; La Plata, in southern Ecuador, nearing construction phase; and El Domo, a mid–scale project already under construction after resolving community conflicts. The Warintza project, situated in a sensitive indigenous area, is making notable progress in community relations and may soon enter exploitation contract negotiations.

Bustamante also highlights projects at earlier stages of their development: Loma Larga, El Mozo, and San Carlos–Panantza. Thes all face procedural and community-relations hurdles. He stresses that Ecuador’s pipeline now includes far more than just Mirador and Fruta del Norte, with international investment growing despite structural barriers.

However, significant challenges remain. Chief among them is the government’s reluctance to reopen the mining cadastre, limiting new exploration opportunities. Projects tied to the national mining company ENAMI, such as those involving Barrick and Solaris, have stalled due to political delays. Lengthy environmental licensing, community consultations and the requirement for Ministry of Finance approvals further complicate development.

Illegal mining is also on the rise, fuelled by the lack of legal concession opportunities and high metal prices. Nevertheless, small–scale mining continues to perform well under current economic conditions.

Bustamante concludes by expressing cautious optimism. While legal and administrative obstacles persist, ongoing investments and project momentum suggest that 2025 could be a transformative year for Ecuador’s mining industry. His firm remains ready to support stakeholders navigating this complex but opportunity-rich environment.