Mining group claims more than 75% of Ecuador mining revenue is from illegal operations

Although the government forecasts revenue from legal mining to double in 2024 and 2025, it must also face the fact that most mining in the country is done illegally. “Illegal mining is generating almost one billion dollars a month,” says María Eulalia Silva, President of the Ecuador Mining Chamber. “This is an astounding figure and amounts to more than 75% of all mining revenue generated in Ecuador.”

According to the Ecuador Mining Chamber, illegal mining is not only causing environmental damage but is depriving the government of needed revenue.

She added that almost all illegal mining revenue comes from the sale of gold and silver.

Silva claims it is up to the government to control illegal activity since it discourages legal mining operations from entering the country. “Many of the illegal mines are encroaching on legal mining tracts, including some that are already under lease to international mining companies,” she says. “The Ministry of Mining must develop clear rules to ensure legal certainty for the legitimate mining industry. It must also ensure enforcement of those rules.”

Silva says that illegal mining is also causing extensive environmental damage, especially in poor, rural communities.

Besides illegal activity, Silva says the court system must establish rules that both mining companies and environmental groups opposing mining must abide by. “There is concern from mining firms that their operations might be shut down by court rulings or popular referendums after rights have been legally assigned. This has happened in Azuay and Imbabura Provinces in recent years and has generated huge losses for the companies affected.”

The involvement of criminal organizations is also a concern for the mining chamber, Silva says. “The drug gangs and cartels are becoming increasingly involved in the illegal operations, not just to generate income but to launder drug money, and this needs to be confronted and controlled. This control will require military intervention on a substantial level due the violence associated with these mines.”

The law enforcement operations currently underway at the illegal mines in the Ponce Enríquez canton are encouraging, Silva says. “Government operations such as this must be expanded to other areas, including the Amazon, where illegal activity continues with little interference,” she says. “It is possible we can contain the activity in Ponce Enríquez but this is only one of many areas requiring intervention.”

In addition, the government must determine where the illegal gold and silver is being sold. “We must find and shut down the sales points since this will make these operations less profitable.” The added that those who purchase illegally mined gold should be arrested and prosecuted.

Despite the concerns, Silva says there has been “very positive news” recently regarding mining in Ecuador. Environmental permits and licensing have been completed for the El Domo, Mirador and Fruta del Norte mines, she said, and the government should begin receiving revenue by 2030.

According to Silva, Ecuador has “enormous mining potential” and the country will enjoy the benefits if clear rules are established and enforced. “We are looking at many billions of dollars in future revenue if illegal mining is controlled and a level playing field is established,” she says.

She adds: “Our estimates are that there is between $200 and $300 billion, at current prices, of gold and silver in the ground in tracts already designated for mining.”