Weekly Nugget

Ecuador: A New Frontier for Mining?

Recent discoveries and successful mine constructions are changing the fortunes for Ecuador's mining industry and potential investors.

Ecuador was until very recently the only Andean nation free of large-scale metal mines. However, recent discoveries and successful mine constructions are changing the fortunes for the country’s minerals, the mining industry and potential investors. 

The current pathway to mineral development began when the World Bank financed the ‘Mining Development and Environmental Control Technical Assistance Project operated by the Ecuadorian Ministry of Mines from 1995 to 2002. 

The aim of this project was to produce mineral maps based on regional geochemical prospecting on 3.6 million hectares to improve mineral exploration for the mining industry, and to rewrite the mining law to attract foreign investment. 

The new law eliminated royalties to the Ecuadorian government, granted exemption from export, income, and value-added taxes, loosened labor, community, and environmental protections, and improved water concessions for the mining industry.  

This legislation was signed into law in December 2000 and by 2005 over 20% of the country was under prospective mining concessions, according one activist group. These efforts began to bear fruit with the discovery of several large deposits.

In 2006, geologist Keith Barron and his company Aurelian discovered a large gold and silver deposit at Fruta del Norte in the Amazon province of Zamora Chinchipe in southern Ecuador, estimated at the time to host 10 million ounces of gold and 14 million ounces of silver.  

Around the same time, Corriente Resources discovered the Mirador copper deposit hosting an estimated 3.2 million tonnes of copper, 3.34 million ounces of gold and 27.1 millions ounces of silver in proven and probable reserves.

However, there would be a backlash against the mining industry.

The Ecuadorian Constitutional Assembly of 2007/2008 passed the Mining Mandate in April 2008 that revoked most of the nation’s mineral concessions and declared a moratorium on new concessions until a new mining act could be approved. In addition, it granted amnesty to hundreds of community anti-mining activists. 

The mandate cancelled 88% of the country’s mining concessions. When the assembly passed the Mining Mandate on April 15, 4,474 mining concessions were abolished, while only approximately 600 concessions were spared, most being small mines and medium non-metallic projects for cement and building materials.

In May 2008, Correa announced his government’s policy for ‘responsible’ mining and pushed through a new Mining Law passed in January 2009. The 2009 reform to the mining code implemented a 70-per-cent windfall tax. 

The tax was not generating income for the government because there were no producing mines to tax. The tax applied only to large mines in full-scale production, which Ecuador does not have. But its existence discouraged potential investors, leaving the vast mineral potential untapped.

Following changes to Ecuadorian mining laws that limited foreign ownership of mining projects, Kinross Gold acquired Aurelian Resources in 2009 and took on the Fruta del Norte project.

Despite the project's potential, and just days before Congress passed the new mining law, Kinross pulled out of Ecuador after a dispute over windfall tax. 

In 2014 Kinross sold its entire interest in the Fruta del Norte project to Fortress Minerals which in turn was acquired by Lundin Gold in the same year. 

However, there were two companies that were able to craft individual agreements with the government of Ecuador to advance their projects. In 2012, after 87 meetings and more than a year of negotiations, the contract for advancing the Mirador copper project was signed.

Lundin Gold was able to craft an agreement in 2016 with the Ecuadorian government to develop the FDN deposit, marking a turning point in the mineral development prospects of the nation. 

A Pivot Back to Mining

In 2016, President Correa pivoted Ecuador back towards mining with the appointment of Javier Córdoba as mining minister with the job of attracting mining investment. He hired the international consulting firm Wood Mackenzie to redesign the mining taxation regime it had earlier helped form based on the country’s model for petroleum.

The election of President Lenin Moreno in 2017 did not drastically alter pro mining policy. Moreno was eager to rebuild Ecuador’s mining sector and end a reliance on crude oil exports, and announced an ambitious new public mining plan. 

This new plan aimed to expand mining exports from $270 million in 2018 to more than $2 billion by 2021. If realized, the mining sector could soon contribute as much as 4% to Ecuador’s GDP, up from the current 1.6%. In 2019, the windfall tax was abolished. 

The region started to bear fruit for mining investment under a new economic regime. Majors, principally from Australia such as BHP (BHP.NYSE), South32 (S32.ASX), Newcrest (NCM.T) and Fortesque (FMG.ASX) moved into Ecuador looking for large copper or gold deposits, encouraged by the lengthy copper-gold intercepts SolGold (SOLG.T) returned from the Cascabel discovery. 

Ecuador’s mining potential still remains largely untapped with an abundance of gold, silver and copper exploration projects looking for financing. This is something the recently elected president Guillermo Lasso hopes to change by attracting private investment. 

Currently, the largest operations in Ecuador are Lundin Gold’s (LUG.T) Fruta del Norte mine and CRCC-Tongguan’s Mirador copper mine, with other projects moving quickly through the exploration and discovery delineation process such as Solaris Resources' (SLS.T) Warintza copper project.  

Dundee Precious Metals' (DPM.T) Loma Larga, Atico Mining Corp.'s (ATY.V) La Plata, and Adventus Mining Corp's (ADZN.V) Curipamba, are in the advanced exploration stage and could begin production in 2023, according to the country's Energy and Non-Renewable Natural Resources Ministry.

The Cascabel copper project, controlled by SolGold, is expected to begin copper production in 2025. 

Check out the Prospector Portal interactive map to explore Ecuador mining and exploration projects. 


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