From the editor's desk

Located in the Andean mountain range, Ecuador is the only country that has so far remained relatively untouched by mining activity. Less than 10% of its territory has been explored for this purpose, yet some of the biggest mines in the world are thought to lie here. The Business Year: Mining in Ecuador constitutes the first production of our Special Report series on Ecuador aimed at shedding light on the consolidation of this promising sector. The course of our in-field research in 2019 was marked by the start of production of two largescale mining projects: Mirador, developed by Ecuacorriente, and Fruta del Norte, by Lundin Gold. Done in collaboration with the Chamber of Mining of Ecuador, this report celebrates these milestones in Ecuador’s mining history and seeks to provide more information on projects to come.

The recent developments of the mining industry in Ecuador were shaped by the fall in oil prices, which made the previous administration under Rafael Correa look for new revenue sources, including mining royalties, especially towards the end of its term (2007-2017). This period saw the establishment of ENAMI EP, Ecuador’s national mining company in January 2010 and the long-awaited reopening of the mining cadaster in April 2016. According to the 2017 Accountability Report of the then-called Ministry of Mining, 275 new concessions were granted covering a total area of 1,054,453 hectares, making Ecuador among the world’s most promising mining players. In January 2018, however, the temporary closure of the mining cadaster was announced. In June 2019, we witnessed the launch of a new public policy on mining for 2019-2030, presented by the vice president, Otto Sonnenholzner, the previous minister of energy and non-renewable natural resources, Carlos Pérez, and the minister of economy and finance, Richard Martínez, whose presence reflected the importance of mining revenue for the country’s improvement of public finances. “Mining is the engine needed to gain speed on Ecuador’s project as a country, which is aimed at progress, equity, and prosperity,” the vice president stated at the launch event.

Ecuador’s unquestionable mining potential coupled with a framework that is progressively becoming more attractive for sectorial investors has made mining investments the leading source of FDI. In 2018, FDI to Ecuador increased by 126% to USD1.4 billion, with more than half of that (53%) coming from mining, while in the first half of 2019, the mining sector’s share of FDI increased to 62%. Additionally, estimations are set for mining to represent 4% of GDP by 2021, with other significant projects, including SolGold’s Cascabel, Lumina’s Cangrejos, INV Metals’ Loma Larga, and Llurimagua being developed in a joint venture between Ecuador’s national company ENAMI EP and Chile’s Codelco. However, concerns remain around the country’s legal framework, the ease of getting environmental permits, and the potential veto capacity of local communities on mining projects. ✖