Dig Deep

What were the main elements that led to the establishment of the Ministry in February 2015 and what is the vision and mission of the Ministry?

The establishment of the Ministry is a response to the geological richness of Ecuador, even though the oil and gas industry in the national economy has minimized the mining sector. In fact, the mining sector was formerly part of the Ministry of Energy and Mines, which included the oil and gas industry. President Correa took the initiative to rebrand the ministry as the Ministry of Non-Renewable Energy, separating electric and renewable energies from it. Amid increasing efforts to diversify the nation’s production matrix and economy, President Correa created the Ministry of Mining on February 13, 2015. We should also keep in mind that the mining and oil industries are strikingly different in terms of business strategy and structure. This was another reason prompting the establishment of the ministry. Today, most mining companies operating in the country are rather small, and mining techniques consequently suffer. Our two main priorities are social issues in the mines and the situation of workers, and environment. We are also keen to raise the technology threshold of the industry. In this context, the main challenge Ecuador faces concerns the need to develop key large and medium scale projects.

What are the main guidelines of the ministry’s strategic plan for sustainable development of the mining industry in Ecuador?

We should be mindful that all human activity registers an environmental impact. The mining industry is no stranger to this. Our main challenge is to make sure we comply with all environmental laws in place today. This will give public authorities and society the guarantee of fulfilling requisite environmental requirements. In this context, the Ministry of Environment plays a key role in the independent and transversal supervision of the regulation. The ministry makes sure that all the licensing processes comply with environmental regulation. In this context, we channel the decisions of the Ministry of Environment to make sure its decision is well understood by the company operating each particular project.

What are the main ongoing mining projects in Ecuador?

At the moment, there are five strategic projects. Mirador, with around 5,000 and 6,000MT of copper; Fruta del Norte with 7 million ounces of gold, with the participation of Lundin Gold, and in which we expect to start building the mine in 2016, and Rí­o Blanco with 600,000 ounces of gold. Chinese company Ecuacorriente is in charge of this project, as well as the Mirador project, and we believe that by late 2015 we could start the construction of the mine. Then there is the Loma Larga project with 1.5 million ounces of gold under the leadership of INV Metals; and finally, the San Carlos-Panantza project, which is at an earlier stage than the rest. There are other interesting projects that Ecuador is developing across the country. One of the main tasks we have focused on over the past few years is in the social arena, as in the past private companies operating mines had given much consideration to communities living in the areas of their business activity.

What is your medium-to-long-term outlook for the mining industry?

I am optimistic about the future, and we view the development of the mining industry as a long-term project. By our estimates with the five aforementioned strategic projects alone Ecuador’s mining industry could receive over $8 billion in FDI by 2025. This would generate some $4 billion in exports and between $800 and $900 million in direct taxes. Our main challenge in the medium term is to resume nationwide exploration works. We believe that 2016 and 2017 could become the two most important years in terms of investment, given that several projects are set to commence operations in 2018. We also need to generate the knowledge and human capital needed to meet the country’s mining potential. Additionally, we have taken steps to build bridges with small mining companies in order to better understand their financing needs and potentially assist in their growth in the near future.