SETTING the sectorial tone
Lundin Gold has been able to demonstrate over the past five years that responsible mining can have great benefits for Ecuador and its people.
After its arrival in Ecuador in 2014, Lundin Gold has started gold production at its Fruta del Norte project in record time. How did you achieve this?
Lundin Gold was able to take its Fruta del Norte project from the start of a feasibility study to construction in five years, with 4Q2019 marking the start of the production phase. A five-year cycle is not typical in the mining industry, as projects tend to take a longer time to reach the production phase from the start of a feasibility study. Our ability to bring stakeholders together was key to this achievement. Lundin Gold found efficient and constructive ways to work not only internally, but also with the government, communities, local suppliers, academia, and industry peers. We were also pleased with the skills of the Ecuadorian workforce and our ability to source a significant amount of materials for the project in Ecuador. This is also considered a great highlight in Ecuador’s history, because it is a strategic project in a country where there was no large-scale mining before. Ecuador has had a mixed experience with small-scale and illegal mining that has not brought any significant benefits to the country or its people. Over the past five years, Lundin Gold has been able to demonstrate that responsible mining can happen in Ecuador with great benefits in terms of development and social and environmental responsibility. Moreover, the project has been able to move forward following a project financing structure, being one of the few cases in the country and serving as an example to other large projects that can take place in Ecuador in the mining industry or other strategic sectors.
Will Fruta del Norte open the door for more industrial mining projects in Ecuador?
Miners have to follow the highest standards of human rights, economic development, and environmental protection, and Lundin Gold is fully aware that everyone will look at Fruta del Norte to judge whether or not it can be a preliminary step to building a broader mining industry in Ecuador. We are at the forefront of this building experience, and transparency has always been our mantra. For example, we opened our doors to inspection from every candidate running in Ecuador’s latest local elections. After this experience, Ecuador definitely has the capacity to increase the number of large mining projects as long as it abides by the highest standards, which should be done in order to maximize the benefits that mining can have on the country’s development.
How would you assess the economic impact of mining compared to that of the oil industry?
When we arrived in Ecuador in 2014, the government had one approach for all natural resources, especially when it came to the fiscal regime; however, oil and minerals are extremely different. Oil needs large capital; but once in operation, the taxes to the national government are significant; however, there are not a significant number of local jobs or procurement opportunities created. Mining generates wealth at the national level, though not the same levels as oil. It also generates wealth at the provincial and local levels through taxes as well as employment. We currently have over 2,000 people onsite, with a total employment figure of 4,000 during peak construction. Once in operations the company will maintain a workforce of 800-900 people on the payroll for 15 years. We have focused on local procurement and hiring as one of our key sustainability responsible mining strategies, all of which have contributed to the government realizing that mining is distinct in terms of its economic impact.
From feasibility studies to production in record 5 years Sets standards for responsible mining in Ecuador