As President Guillermo Lasso in Ecuador casts a fresh set of eyes over the economic, social, and financial issues that the country is struggling with, the economy and mining industry is starting to look up. 

President Guillermo Lasso was elected as Ecuador’s new president in April 2021, and he is committed to helping turn the country around by addressing public health concerns regarding the Covid-19 pandemic, addressing fiscal and sovereign debts, and expanding Ecuador’s mining industry. 

Lasso issued a decree at the beginning of August called “Decree 151” that outlines a new mining policy and a “clearly articulated plan” to support responsible mining through key investors and investments which in turn help boost the economy. 

A four-month action plan has been established in order to “develop an efficient and environmentally and socially responsible mining industry, to promote national and foreign investment, and to implement best practices for the exploitation of resources done with community engagement and care of the environment.” 

Having the four-month action plan in place creates a defined timeline of specific actions and “guarantees the security of title, respects pre-existing mining rights, and will involve an inter-institutional strategy for the eradication of illegal mining.” 

Lasso recently had a meeting with Daniel Earle, CEO of Solaris Resources in regards to the new decree and what he had in store for the future of Ecuador’s economy and mining industry. 

“This is a very important decree that will undoubtedly promote foreign or national private investment in the mining area of the country. The Government of the Encounter promotes clear policies to attract investment, generate new income for the State, more opportunities, employment and development for neighboring communities and for the whole country,” Lasso said in a recent Twitter video. 

Ecuador’s Vice Minister of Mines, Xavier Ver Grunauer also singled out Solaris and it’s Warintza project as a model for mining in the country:

“There are very successful projects, such as Solaris’ Warintza project, which shows that with good on-site management, communication, and community participation, very interesting things can be achieved….the most important aspect is having a good relationship with the communities and empowering the project communities. I think there is no other sector like mining to promote the development of remote communities. It is very unlikely for the central government to be able to provide all the help or to foster all the projects there might be and that are generated by the private mining sector. Not all mining companies have these policies, nor do all companies have that level of commitment .” – Vice Minister of Mines of Ecuador, Xavier Vera Grunauer

Although he is optimistic about the country, Lasso was elected president at a time where the country was struggling not only financially but from the COVID-19 pandemic. 

“This country, even going into the pandemic, was in a dire financial situation…  they were running large fiscal deficits, they had run up their sovereign debt to unsustainable levels, and they actually had to restructure part of their debt,” Mr. Earle explained. 

“His first priority as I mentioned is addressing the public health crisis created by COVID. Ecuador was very hard hit by COVID.” 

The country has already made huge progress in the battle of COVID-19 under Lasso’s administration, securing vaccines for the public and plans to reopen the economy. 

“When I was there a few weeks ago they had administered 9 million shots within a total population of 17 million people,” Earle said. 

Although there is still a long way to go, Earle says “President Lasso is running at the highest popularity levels for president in Ecuador, a truly historic level of support.” 

Lasso is a conservative and self-made entrepreneur, creating and growing his own entire banking empire before he was elected president. This has given him a major advantage in his analysis and plan for the country’s economy.

“The mining sector is seen as being absolutely critical to the economic fortunes of Ecuador. This is something that the government is absolutely focused on,” Earle explained. 

“It (the decree) defines the mining policy of Ecuador to support a major expansion of the sector through foreign investment. And it lays out a clear action plan and the timeline for making progress towards this objective.” 

With this new decree in place to help boost the mining industry, it will generate more employment and investment for the country, which is necessary to change the image of Ecuador. A successful mining industry will also generate more exports, more taxes, and more income for the country.

However, Lasso wants to ensure that this change is not all about investments and money. 

“It’s not purely just about investment, but alongside that the government is also very clear that this isn’t just going to be about resource development or mining development, project development, this is going to go alongside social development and of course environmental projections, to the highest standards of environmental protection,” said Daniel Earle. 

“As a government, we are clear that mining needs to develop because it is the future of the country. But we also realise that Ecuadorian mining has to incorporate the best environmental and social practices. We don’t want mining at any cost, and we will only allow mining that respects the environment and communities. We understand that there are some places, such as protected areas, where mining can’t take place, and that is fine. Meanwhile, we will improve the regulations to ensure that the mining that does happen is responsible,” Lasso said in a statement in July. 

Social aspects, environmental protection, and of course mining and project development are all key points Lasso wants to drive home to the country. He recently made a statement citing Solaris as a model that other industries should follow. 

“When the government talks about natural resource development, they are very clear to mention that there will be social development alongside it, so community development to go with the project development, and so this would be things like education and training, and infrastructure development, community buildings, health facilities and so on,” said Earle. 

Earle also had the chance to speak with some of the biggest business leaders in the country. 

“They are very optimistic of the potential in Ecuador for the private sector to not only grow but flourish under this Lasso administration… This is the first administration they have had in 50 years that understands the role of the private sector and the benefits it can bring.” 

“You’ve seen Lasso make statements that reflect that kind of view, where he has talked about over the medium term this country turning into a major mineral exporter, such as Peru or Chile.” 

Lasso touched on the importance of the mining sector, comparing it to others such as Chile and Peru. 

“Ecuador has resources comparable to those of Peru and Chile; however, we are behind. We have to start moving forward and we have to promote the mining sector; thus, we will engage in debates with all those who want to demonize the oil and mining activity,” Lasso explained at an AEI Event in Quito. 

According to the LatAM investor report Q3 2021, “2020 to 2030 will be the decade of mining in Ecuador. By 2030, we hope that mining will be attracting billions of dollars of investment, generating billions of dollars in annual exports, and employing hundreds of thousands of Ecuadorians. We have the same geology as Peru and Chile and even the little exploration that has happened so far has found some massive deposits. When these are turned into mines they will be among the biggest in the world, which is why we want to attract the largest, most responsible mining companies.”

Earle described Ecuador as similar to a ‘blank canvas,’ in comparison to the mining industry in Peru or Chile who have had mines for decades. 

“So you’ve got basically the first two mines in the country that have just gone into production in the last couple years, so the bulk of the development is still in front of them.” 

He explained that the “New Minister of Energy and Non-Renewable Natural Resources Juan Carlos Bermeo said by 2030 they hope that the mining sector will be attracting billions of dollars of investment per year and generating billions of dollars of annual exports and employing hundreds of thousands of Ecuadorians.”

The future of the economy and mining sector is something Lasso, Earle, and Solaris Resources, and the people of Ecuador hope to see flourish in the coming years. 

“We all want sustainable development, we all see the long term potential in this jurisdiction… This is something that is truly extraordinary in a global context,” Mr. Earle said. 

He is excited for what the future holds and what Lasso can and is already starting to do. 

“It’s really going to be a happy time in front of them when this all gets going… It’s really heartening and energizing to be a part of this revival which is about to get underway in Ecuador, they haven’t had this opportunity in so long.” 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.