The Business Year

Xavier Vera Grunauer

- Energy & Mining

Xavier Vera Grunauer

Minister, Ministry of Energy and Mines

Bio

Xavier Vera Grunauer earned an undergraduate degree in civil engineering at the Catholic University of Santiago de Guayaquil (UCSG), an MS in geotechnical engineering at the National University of Mexico (UNAM), and a PhD in geotechnical engineering, with minors in seismology and structural engineering, at the University of California, Berkeley. He has over 24 years of professional experience in the field of civil engineering and earned a diplomate, geotechnical engineering (D.GE) certification from ASCE. He has worked on various engineering projects such as civil, petrochemical, mining, offshore, and port projects in Ecuador, the US, Mexico, and Peru. He was a member of the Committee of the Ecuadorian Construction Norm and lead author of the geotechnical and foundations chapter and co-author of the seismic hazards and earthquake resistant design chapter (officially presented in 2014). He co-led the US-Ecuador GEER team for the Mw 7.8 Earthquake on April 16, 2016. Vera Grunauer is also the CEO of Geoestudios, a geoscience consulting firm.

With Ecuador experiencing a great period for the mining sector, the Ministry of Energy and Mines is looking to attract responsible investors that will contribute to the well-being of the country.

What have been some of the key points of the last year in office, and what is your plan of action for the ministry in the coming years?

It is important to highlight that Executive Decree 151, which President Lasso issued in August 2021, is unique in Ecuadorian public policy because it clearly demonstrates the support of the president for the mining sector. This executive decree has five pillars, including the regulatory framework and legal insurance, the development of mining projects, and new investments. Another significant point is the transversal collaboration between the defense ministry and the government to eradicate the illegal exploitation of minerals. I should also highlight our efforts to increase transparency. Ecuador is the 55th country to join the Extractive Industries Transparency Initiative (EITI), which is an organization that pursues transparent state processes. President Lasso has given us clear signs that transparency is a fundamental pillar of this government, as part of which we will promote legal and responsible mining. We have also renewed our agreement with the Association of Mining Engineers of Ecuador (AIME) to incentivize best practices. We are also working closely with the Institute of Geological and Energy Investigation (IGE) to sign an agreement with a consortium of colleges including the University of California, Berkley, Georgia Tech, Colorado University, and the University of Illinois in Urbana Champaign to teach mining, environmental, and hydraulic techniques. It is essential to train our local engineers to increase job growth. Additionally, we have instituted a public-private advisory council with six leading mining embassies. We want to ensure that in the next 15 years, Ecuador will achieve the same level of exports as Peru or Chile of USD20-30 billion annually.

Ecuador has beaten all the odds in terms of the export of minerals. What will you do to maintain these levels of revenue and exports of minerals?

The initial estimates set by the Ministry of Energy and Mines of USD1,600 million for mining exports in 2021 were exceeded by 31%, closing 2022 with a historical record of USD2,092 million, 99% higher than the export figures in 2020. The expectation is for exports to increase because, in the coming years, we will see important investments in mining projects. An extremely long-term project will enter into production and exploitation, and in 2023 we hope to commence exploitation in Azuay province. Subsequently, in 2024, Curipamba, in the province of Bolívar, and La Plata, in the province of Cotopaxi, will begin exploitation. With these projects, we will increase Ecuador’s capacity to export minerals, and the goal is to see exports of USD4 billion by 2025. Given sufficient investment, we could easily surpass banana exports, and I expect to surpass shrimp exports within the tenure of the incumbent government.

How will mining eventually contribute to the growth of employment?

According to information from INEC, suitable direct employment in the mining sector in September 2021 was at 40,000. If we consider indirect employment, this figure is closer to 150,000. By 2025, we expect a figure of around 300,000. This is important, because mining has a real, tangible effect on employment and the well-being of citizens. From there, the question is what the projections look like for the coming years. The geological potential of Ecuador is immense. In fact, the embassies of mining countries have informed the president that just 10% of the territory of Ecuador has been studied. Small-scale mining has a wide spectrum in mining work and represents approximately 25% of total exports. We want this to increase, because in terms of direct employment small-scale mining represents 25% of the 40,000-strong workforce. In reality, there is a huge quantity of work, and for this we are in the process of signing an agreement with the Central Bank. In theory, the bank will buy bars that are 60% gold and 40% other metals. The bars will then be sold to a refinery, for example in Switzerland. These refineries will produce bars of 99% purity to comeback to Ecuador’s monetary reserves. President Lasso wants the reserves, which currently stand at USD5 billion, to reach USD8 billion.

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