Ecuador's Mining Sector Offsets Oil Price Decline with First Large-Scale Operations
In 2019, Ecuador witnessed the launch of its first large-scale mining operations, marking a significant milestone for the country. Lundin Gold's Fruta del Norte mine, which produced over 200,000 ounces of gold last year, and the Chinese-owned Mirador mine, currently undertaking an expansion project to increase its copper output beyond its current capacity of 130,000 tonnes per year, have played instrumental roles in this development.
The surge in mineral exports last year, amounting to over US$1 billion, has helped counterbalance the decline in oil prices and production, which serve as Ecuador's primary export, according to Maria Eulalia Silva, President of the country's Chamber of Mines.
Looking ahead, several upcoming projects are set to attract billions of dollars in investment for new mines over the next decade, further bolstering Ecuador's mining sector.
Supported by BHP and Newcrest Mining, SolGold is currently preparing a prefeasibility study for its Alpala project, expected to be released later this year. Situated within the extensive Cascabel concession in the northern part of the country, the project boasts 2.66 billion measured and indicated tonnes, grading at 0.37% copper and 0.25 grams gold per tonne, resulting in an estimated 9.9 million tonnes of copper and 21.7 million ounces of gold. Another notable project, Ruta del Cobre, is progressing, with Southern Copper scheduled to commence a feasibility study by the end of last year.
These projects hold immense potential for attracting significant investments and generating new job opportunities in Ecuador. They contribute to strengthening the country's economy and reducing its reliance on oil.
Both presidential candidates, Arauz and Lasso, have emphasized the importance of mining investments in stabilizing Ecuador's struggling finances. They have expressed their commitment to supporting mining investments as a means to finance their respective programs if elected.
Daniel Earle, CEO of Solaris Resources, highlighted the pro-mining platforms of both candidates, assuring potential investors of government support. Solaris Resources is rapidly developing the Warintza project, one of David Lowell's final discoveries, with the aim of transforming it into a world-class mining venture.
Miners are optimistic that the new administration will introduce further reforms to facilitate investment in the mining sector. One crucial aspect would be reopening opportunities for new mineral claims, a process halted three years ago by President Moreno due to overwhelming interest. With mining giants like Anglo American, BHP, and Fortescue Metals actively involved in the country, there is a strong demand for such initiatives.
Additionally, mining companies are advocating for tax stability agreements to safeguard new projects from potential future tax hikes. This request follows tax changes implemented by former President Correa to attract investments, including the elimination of a controversial windfall tax.
