The Business Year Special Report
Walter Spurrier, President, Grupo Spurrier
According to Grupo Spurrier, Ecuador’s mining industry is perfectly poised for growth, even in the midst of an uncertain oil and economic future.
• Interview
How would you describe the origin of Grupo Spurrier and its shift from producing oil-related information to a multi-sectoral offering?
We began operations in 1971. Our clients at the time were oil companies arriving in the country. Ecuador was completely unknown to them, and we started publishing a weekly report in English as the oil company managers did not speak Spanish. It was not a news service as such, but an analysis of current events relevant to the business community. Subsequently, local businesses started to demand our services, and in 1975 we started publishing our report in Spanish. The country was undergoing a momentous transformation; both multinational and local businesses were eager to understand changes. In 1975, for the first-time ever, Ecuador became a participant of global financial markets, and since then we have maintained our weekly reports in both English and Spanish. We have expanded into consultancy services, becoming a think tank; we also produce reports tailored to individual businesses. We started catering to the oil industry, though early on we expanded to other industries, such as finance and foreign trade. We have covered the mining sector since the 1970s and have gone over the previous, failed attempts to open up to mining through the issuance of a new specialized law. Now that the opening has been successful, we are covering mining issues more thoroughly.
What factors determine the future of mining in Ecuador?
Ecuador is drawing the attention of international mining companies for two key factors. First, at the start of the century, the government of Gustavo Noboa drafted and passed the first-ever mining law that was investor friendly. However, a few years later, in 2008 there was a halt of mining projects. There was a standstill of mining operations that lasted seven years, until 2015, when oil revenues fell, and the government of Rafael
Correa reversed its anti-mining stand. It turned to mining as a potential revenue generator that would compensate for lost oil revenues. Ecuador has great mining potential, though it remains underexplored. Several recent gold and copper discoveries have sparked the interest of international mining companies. Ecuador is a small and densely populated country, which can be advantageous for mining activities that ordinarily require building large infrastructure projects. In Ecuador, however, one does not have to go far to find a major road, power grid substation, or deep sea port. That is a huge advantage and lowers the cost of developing a prospect. Mining in Ecuador is in its nascent stages, whereas the oil sector is mature. Today, the main problem faced by Ecuador is ensuring a stable political and social environment, though I do not doubt the country will enter a buoyant mining era sooner rather than later. None of the political leaders are opposed to mining industry development, and future administrations will be aware of the contribution of an expanding mining sector to the health of the national economy.
Leading firm producing economic intelligence on key sectors
Commenced operations in 1971
What are your views for 2020?
2020 seems set to be challenging for the local economy. The recently passed tax bill falls short of generating the funds required to meet the deficit-reduction goals of the economic program, nor has there been enough progress in trimming current budgetary expenditures. The authorities have acknowledged that the plan’s goal to wipe out the budget by 2021 will not be met and that adjustment will have to continue for a few more years. Ecuador’s access to international financial markets will remain limited. The best bet is for Ecuador to undergo zero growth in 2020. However, sectors not dependent on the local market, such as mining, will suffer no ill consequences. Investment in mining will be one of the high points of economic performance in 2020. ✖