Ecuador’s election on April 11th ushered in a new era for the mining industry. The country’s new president Guillermo Lasso won the runoff with 52.5% of the vote, and opposition leader Andrew Arauz conceded defeat. Both candidates were mining-friendly options for the nation that holds some of the richest copper and gold deposits in the world. 

Mining Heaven

The country has been a supporter and profitable ground for mining companies to operate in, giving mining companies wide latitude for their operations while ensuring that consultation and standards are upheld at every stage. Going forward, the mining industry will need to keep those environmental principles at the forefront of their operations, as countries like Ecuador and their new president Lasso are promoting open policies for boosting investment in the private sector while balancing environmental responsibility. 

The government at both the federal and local levels is consulted regularly for mining projects because of the consultation needed for projects operating with the approval of local communities. The need to protect the land they work in and ensure the safety of the local communities is paramount to a long-term partnership in the modern mining environment. Ecuador has been a solid and reliable partner in this sense, providing mediation between opposition groups and the companies that bring jobs and economic growth to the region. 

Proposals relating to mining within Lasso’s government plan framework include:

• To exploit mining resources with the application of international best practices to protect the environment
• Regulate the sector to promote legal and responsible mining
• Design a plan that maximizes mining benefits while safeguarding environmental well-being
• Appoint a Minister of Environment and Water who is concerned with environmental conservation but who will accompany and support the use of non-renewable natural resources.
• Promote new concessions, as well as compliance with all regulations for the care of the environment and water sources
• Work synergistically between the public and private sectors to develop public policies for economic and environmental development
• To present a legal framework with regulations that:
• Ensure the growth of the mining sector and care for the environment
• Dismantle illegal practices by strengthening border security
• Respect intangible zones
• Establish criminal liability and obligation to repair and compensate for infringement of environmental quality standards

Source: Guillermo Lasso’s government plan

As the pandemic slowed the country’s economic growth, Lasso will look to the mining industry to support the recovery over the coming years. 46% of Ecuador’s Foreign Direct Investment from 2017 to 2020 was generated from the mining industry. A significant portion of GDP comes from the sector, giving Lasso a clear direction for where to focus efforts. 

Responsible Growth

Mining in Ecuador accounts for a large portion of the direct and indirect jobs in the country and is one of the most critical sectors for the country. It was one of the few that grew in 2020, as the pandemic shut down most economic activity. Simultaneously, the president has pledged that the sector must grow responsibly, as he considers illegal mining to be the greatest threat to economic development and environmental protection. Despite the pandemic and rising death toll, mining companies continue to operate unhindered by restrictions as the industry pushes forward on exploration, discovery, and production. 

To accomplish his economic goals while preserving environmental integrity for the miners in the region, Lasso has tried to establish an open dialogue with environmental groups and indigenous Ecuadorans. The goal is for the government and miners to work in tandem with those groups to ensure respect for their culture and their customs. 

The industry has little to worry about in the way of obstruction or barriers, as the president has also said he would like to appoint a Minister of Environment and Water who is open to and will support the use of non-renewable natural resources. The mission to protect Ecuador’s natural beauty and the local communities will be balanced with the mission to maintain and grow a flourishing mining industry. 

A Favoured Project

It seems the new president even has a favourite partner for the sector, touting the Warintza Project in an interview on national television in early April before the election. A visit to the project should be coming imminently, as the potential of the project to be a key production source is massive. 

The company taking the charge for the project is Solaris Resources, a Canadian copper mining company. Solaris has begun exploration at the site and plans to start drilling at Warintza East and South this quarter. The company has follow-up discovery drilling planned at the Warintza West site as well, with maiden drilling at Yawi and the Caya gold anomaly in the second half of the year. 

Three additional holes at Warintza Central are bearing out high-mineralization results, with the highest grades starting at the surface. Solaris’ recent press release highlighted some of the progress made on the project: 

• SLS-17 was collared on the western side of Warintza Central and drilled into an entirely open volume to the south, returning 494m of 0.50% CuEq¹ from the surface, extending the southern limit of mineralization in this direction
• SLS-18 was collared on the western side of Warintza Central and drilled into an open volume to the southeast, returning 797m of 0.83% CuEq¹ from near-surface, including 370m of 0.94% CuEq¹, adding mineralization between the western and eastern drilling at Warintza Central
• SLS-20 was collared on the eastern side of Warintza Central and drilled into an entirely open area to the north, returning 688m of 0.51% CuEq¹ from surface, including 366m of 0.60% CuEq¹, extending the limit of mineralization in this direction
• To date, 28 holes have been drilled at Warintza Central, with results reported for 19 of these; results for SLS-19 were delayed by geotechnical issues during drilling but are expected in the near future

Clear Skies Ahead

Having a new president in office and a willingness to push forward at full speed for the mining industry, Ecuador is sure to be a reliable and robust partner for miners like Solaris over the coming years. 

With the lifting of restrictions on drilling and more discoveries at Warintza, a global economy heating up after the freeze of COVID-19, and a deposit-rich region, the future is looking very bright for miners in Ecuador.

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.