Ecuador looks to the country’s gold, silver and copper reserves to bolster the economy; faces opposition in areas where mines would operate

Oct 28, 2015 | 4 comments

The government of Ecuador is sending strong signals to large international mining companies that the country is open for business.

A sign protests against a proposed mine near Intag.

A sign protests against a proposed mine near Intag.

Strategic Sector Minister Rafael Poveda says that Ecuador offers world-class terms for companies willing to invest in mining operations. “I think that the interested parties will find very favorable terms and a welcoming attitude from the government,” he said Monday at a press conference for international media. “There are enormous, untapped resources in Ecuador.”

“We have 25 mining areas to allocate,” Poveda said. “We have drawn up a map of our resources and are ready to divide it among successful bidders.”

Poveda says that Ecuador hopes to attract at least $750 million in foreign investment in the first quarter of 2016 by opening new areas rich in gold and copper for exploration. If plans follow expectation, the country could reap more than $3 billion in mining revenue over the next three years.

It is income that the country desperately needs to offset the sharp drop in oil prices that some experts say could persist for several years. At the same time, Poveda knows that past experiences have made mining companies leery of investing in Ecuador.

In 2013, Canada-based Kinross Gold closed its Ecuador operations after the government changed terms negotiated earlier and demanded a larger share of profits. The company sold out for $240 million, a fraction of the $1.2 billion it paid in 2008. That experience has kept other companies away and make them suspicious of the latest overtures.

The government is also facing a hard-sell to communities, many of them indigenous, that will be affected by mining operations. President Rafael Correa has been touring mining rich southern Ecuador in recent weeks, telling locals of the financial benefits that will come from mines.

“The income from mining will benefit all Ecuadorians, especially the poor,” says Correa. “We need this income to advance our country.”

In October, Correa pushed his plans in Cuenca, Loja and Zamora, cities close to the mineral reserves the government hopes to exploit.

Many community leaders fear that mining, especially if it is open pit, will pollute water sources and cripple agriculture, which is the primary source of income in rural areas. Some indigenous leaders claim that promises have been made to Chinese mining interests that will mean bypassing thorough environmental studies.

Indigenous leader Carlos Perez says that mining operations for Chinese companies are being fast-tracked. “Secret deals have been made by the government that do not include the people who are affected.”

Correa says such charges are unfounded.

 

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