Lack of government control and oversight allows illegal gold mining to expand and prosper

By Marcena Hunter

In recent years, Ecuador’s gold sector has transformed dramatically. Once a largely informal livelihood, artisanal and small-scale gold mining (ASGM) has evolved into a criminally exploited industry.

Drawing on interviews, fieldwork, and open-source analysis, the report examines how systemic vulnerabilities have enabled organized crime groups (OCGs) to capture sections of the ASGM sector and launder gold and illicit finance into formal supply chains. With limited government oversight, widespread corruption, and a culture of impunity, Ecuador’s gold sector has become a major source of income for OCGs, alongside growing violence, environmental degradation, and financial crime.

The National Police and armed forces raided an illegal gold mine in Camilo Ponce Enriquez canton, Azuay province, in August 2024.

The gold processing hubs of Zaruma and Portovelo, in El Oro province. Gold extracted from across the country is transported to Portovelo for processing, where lax regulation, unclear ownership of processing plants, and non-transparent export practices allow illegal gold to enter international markets.

The absence of effective assay systems and weak customs enforcement contributes to significant export irregularities.

Trade data reveals that the United Arab Emirates and India are now major recipients of Ecuadorian gold, yet discrepancies in reported volumes raise concerns about undeclared or falsely declared exports. Furthermore, Ecuador’s ports — particularly Guayaquil and Puerto Bolívar — are vulnerable points in this supply chain, with data on both gold doré and gold concentrate exports raising concern.

Meanwhile, environmental harms continue to mount. Cyanide and mercury pollution from reprocessed tailings in Portovelo and Zaruma are contaminating rivers, killing aquatic life, and contributing to cross-border tensions with Peru. Despite the 2015 ban on mercury use in Ecuador, its clandestine application persists in ASGM.

Expansion of OCGs into gold mining, especially groups like Los Lobos, who extract, extort and control mine sites and processing plants, continues. Extortion payments, locally called “vaccinations,” are common. High homicide rates in mining areas such as Camilo Ponce Enríquez and Orellana reflect the violence accompanying the convergence of criminal activity.

Recommendations include stronger financial transparency, making public processing plant registrations, enforcing national gold traceability systems, and improved port and export monitoring. The report calls for increased support for specialized law enforcement task forces, anti-corruption investigations, central bank gold buying schemes, and enhanced community engagement to promote resilience and formalization in the sector.

Read Global Initiative’s full report on illegal mining in Ecuador.
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Credit: Global Initiative