Let’s get organized • Focus: Distribution of state competencies on mining

INSTITUTIONAL CHANGES INCORPORATE THE OLD MINING, ENERGY, AND OIL DEPARTMENTS INTO ONE SINGLE ENTITY: THE MINISTRY OF ENERGY AND NONRENEWABLE NATURAL RESOURCES.

APPROXIMATELY TWO YEARS HAVE PASSED SINCE the consolidation of the country’s energy matrix—mining, oil, electric power, and renewables—into one single government entity.

On June 5, 2018, via Executive Decree Number 399 of May 15, 2018 and published in the Official Gazette Supplement 255, the Ministry of Electricity and Renewable Energy, Mining and the Secretariat of Hydrocarbons were folded into the Ministry of Hydrocarbons. The resulting agency was named the Ministry of Energy and Non-Renewable Natural Resources (MERNNR).

Within its organic structure, MERNNR includes three vice ministries related to the ministries absorbed: mining, energy, and hydrocarbons. As a result, the institutionalization of the mining sector experienced a significant change since MERNNR took over the responsibilities that had been legally vested upon the Ministry of Mining through the Executive Decree Number 578 of February 19, 2015 and published in the Official Gazette Number 488 of February 28 the same year.

This results in the agency having the following structure:

(I) The Ministry of Energy and Non-Renewable Natural Resources (Sectorial Ministry) sets and executes the policies and plans applicable to the corresponding areas to develop the energy sector. Article 7 of the Mining Law defines its competences.

As a result, the Vice Ministry of Mines is part of MERNNR, merely executing the mandates that MERNNR establishes or the directives set forth in the National Plan of Mining Development issued by the ministry. Thus, the Vice Ministry no longer has the autonomy to decide or to take the lead to execute the management of projects. Nevertheless, the Vice Ministry of Mines is formed by the Sub-Secretariat of Artisanal Mining and Small-scale mining and the Sub-Secretariat of Industrial Mining, which oversees strategic and large-scale projects in Ecuador. Both sub-secretariats execute their powers through two separate organizations selected according to the phase of each individual mining project: (a) exploration and (b) production. Despite the consolidation, the Vice Ministry of Mines continues to rule over the sector.

(II) The Agency of Regulation and Control of Mining (ARCOM) is responsible for the oversight, inspection, audit, intervention, sanction, and control of those who develop mining activities with the goal of reaching a rational, technical, socially responsible, and environmentally sustainable use of the non-renewable natural resources, within the existing legal and environmental regulation. ARCOM’s competences are detailed in Article 8 of the Mining Law;

(III) the Institute of Geological and Energy Research (IIGE) was created through the Mining Law of 2009 and now is an institution working under the umbrella of MERNNR. The vision of this institution is to generate, systematize, and manage scientific, technological, and metallurgical-mineral-geological information at a national level in order to support a territorial structure oriented to the sustainable development of natural resources, as well as the preventive management of geological threats to the community.

(IV) the National Mining Corporation (ENAMI EP) is responsible for managing mining activities in the sustainable extraction of non-renewable natural resources, performing its duties at the highest standards of quality, business, economic, social, and environmental standards. ENAMI EP obtains mining concessions in areas that have copper potential. In addition, it can cede or transfer mining rights around areas that have other metals (gold, iron, titanium) within its project portfolio.

(V) the municipalities, which the constitution awards a framework of exclusive competences for the exploitation of geological materials that lay in river banks, lakes, beaches, and quarries. Ferrous and non-ferrous materials are excluded because their regulation is part of the competences of the Sectorial Ministry and central government.

Additionally, to establish the institutionalization of the mining sector, it is necessary to note the competences of the environmental authorities, which also make mining activities possible. These are the Ministry of Environment (MAE), which manages, plans, regulates, and controls all the environmental effects that result from mining activities and is the national environmental authority in the mining sector according to the Environmental Code for Mining Activities through the Ministry Agreement 37 of the Ministry of Environment published on March 27, 2014 in the Official Gazette 213 of March 24, 2014.

MAE issues the corresponding environmental permits for mining activities and can withdrew them when regulations are not met. In order to improve efficiency and speed up the licensing processes, all processes go through the Single System of Environmental Information (SUIA) platform to decentralize the service and the regulation. Decentralized Autonomous Municipal Governments (GADs) can qualify as environmental authorities within their region. If that qualification does not take place, the Decentralized Autonomous Provincial Government is the competent entity.

GADs do not have the authority to issue environmental permits for industrial projects; however, the 20th Transitory Provision of the Organic Code of Territorial Organization establishes that the national environmental authority will be responsible for awarding environmental permits until the GADs go through the process to become the environmental authority in the territory. The aforementioned information was resolved and regulated by the Constitutional Court of Ecuador No. 11 within the Case No. 0048-11IN of November 12, 2013 and published in the Official Gazette Supplement 143 of December 13, 2013.

The conclusions about the current distribution of competences in the mining sector mean that: (i) the change of the institutional structure includes three strategic sectors that have their technical differences for the management of sectorial public policies, which are non-solid; and (ii) the international scenario could value the transitions as changes of the authorities within the sector, with negative effects, which could hamper the attraction of FDI. ✖