REDEFINING ECUADOR’S MINING POLICY

Javier Robalino Orellana from Robalino Law recounts Ecuador’s efforts thus far to refine its policies in order to fully grasp the immense possibilities offered by its natural wealth in resources.

THE GLOBAL DISTRIBUTION of non-renewable natural resources and its regional, national, or sub-national allocation underscores the random and unpredictable convergence of natural phenomena and human interventions that shaped their current geopolitical conditions. The unpredictable, and at times foreseeable, circumstances that distributed them amongst nation-states, however, must not eclipse the determination of government policies directed at exploiting the advantageous, and dare we say good fortune, such natural endowments bestowed upon a handful of countries.

Ecuador belongs to the fortunate few gifted with world-class mineral deposits. Natural endowment of plentiful mineral deposits is summarized in the 23.06-million-ounce Cascabel copper-gold-silver project, the 17-million-ounce Au Cangrejos and Gran Bestia gold-copper Projects, 7.8-million-ounce Au Condor gold-silver project, and the 3.38-million-ounce Au Loma Larga gold-silver-copper project. These four projects alone contain 50 million ounces of gold between them and an additional 13.2 million tons of copper and minor amounts of silver.

Favorable conditions such as these require assertive policy decisions in order to adequately, and efficiently, funnel revenue streams from their exploitation toward the plethora of social and economic projects needed to curve Ecuador’s inequality. Such assertiveness is underscored in Executive Decree 151, sanctioned by President Lasso during the first months of his term in office.

Natural resource endowment is merely a variable in the complex web of economic development. Mining in Ecuador, when compared to the oil and gas industry, is still securing its foothold. However, its role as a current and future pillar of the national economy is evident. Recent data from Ecuador’s Mining Chamber suggests approximately 350,000 new jobs will be created, as an estimated USD6 billion of fresh FDI flows to Ecuador (CME 2022).

Executive Decree 151, titled “Mining Industry Action Plan,” revamps public efforts toward the sector. Particularly, it underscores the need for coordinated institutional efforts and an efficient response by its bureaucratic machinery. Moreover, it highlights a much-needed strategic shift in policy by constructing a macroeconomic paradigm in which the nations natural resources drive the country’s economic and social development.

In an effort to leverage on Ecuador’s favorable conditions, government actions suggest a consolidated effort is underway. One in which, Ecuador’s endogenous endowments, infrastructure, connectivity, geographical position and inflation free economy may flourish. At a regional level, each jurisdiction will forge the means it deems necessary. The current global stage features perils and challenges, in which the shadow of escalating conflict, economic stagnation, and virus mutation loom over current and future policy decisions. Whilst these challenges are compounded by the prevailing political, social, and economic conditions present in each country, current and past adversities have redefined, and will, redefine, the region as a whole.

Circumstance, merit, and fortune are swirled together, challenging past efforts that demand innovation, as government efforts seek to implement new policies and boost pro-mining legislation. Whilst these efforts are simultaneously needed and well received, it is worth highlighting that Ecuador displays favorable conditions when attracting FDI. Legal structures such as investment contracts, tax incentives, free economic zones, amongst others, highlight such benefits. However, firm political steering has historically, and most likely currently, been a decisive ingredient in transforming the nature’s bounty in human well-being.

QUITO

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GUAYAQUIL

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MACHALA

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CUENCA

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