Ecuador

This year marks 25 years since Ecuador implemented the US dollar as its currency, in a last-ditch effort to break out of an unprecedented economic crisis. After everything else failed and trust in the El Sucre, the former national currency, could not be restored, then-president Jamil Mahuad reverted to the dollar. Dollarization has become one of the most popular public policies in the country’s history, with an approval rating in polls close to 90%, writes Latinvex, a regional publisher. Though almost everybody supports the dollar, and mining is seen by the political elites as a source of more dollars, local communities often feel differently.

In 2022, nationwide protests led to the shutdown of several mining operations and the government conceding a 12-month moratorium on new concessions until a community consultation law was passed. According to an article by Al Jazeera, local communities and the Confederation of Indigenous People of Ecuador (CONAIE) have opposed the development of La Plata, by Atico Mining, which is expected to start mining next year. Clashes between protestors and security forces have been repeatedly reported in the country.

Before his re-election in April, President Daniel Noboa attended PDAC and signed six mining contracts worth US$4.8 billion, among which was La Plata, a gold-rich VMS deposit developed by Atico Mining. The president is also in talks for a future free trade agreement with Canada. These moves only intensified the mobilization of several anti-mining trade unions and indigenous organizations like the CONAIE.

To win over the population, mining companies have rolled out world-class ESG programs. Beyond the traditional investments in infrastructure, health, education, and other social programs, the mining industry has also brought in expertise and capital to unlock opportunities in unrelated sectors like agriculture or tourism within their areas of influence. A World Bank report titled “Ecuador: Growing Resilient for a Better Future,” identifies mining, tourism and agriculture as the three core sectors with the highest potential to boost the country’s economy and become sources of sustainable income generation for the long run.

There are other marks of a still-immature mining jurisdiction, from the clumsy way in which the country deals with anti-mining resistance and illegal mining, to a shortage of mining-specific skills, although some talent has migrated from the oil sector. Ecuador also recently experienced an electricity crisis due to a severe drought impacting its mostly hydro-based power generation.

That said, even when compared to mining giants like Peru and Chile, Ecuador offers advantages: Almost three times smaller than Chile and 4.5 times smaller than Peru, Ecuador is more easily connected to various ports and has good overall infrastructure, lowering transportation costs. Ecuador also benefits from a positive water balance across its territory, unlike parts of Chile and Peru. Taxation-wise, Ecuador is also competitive relative to its larger peers.

In fact, with the development of FDN and Mirador, a star was born. Ecuador holds some of the largest gold and copper deposits in the world. The country’s ascent into an exclusive club of premier mining jurisdictions is unquestionable. Mining exports have increased from US$282 million in 2018 to US$3.3 billion in 2023, and mining is soon to displace bananas as the third-largest export category. Change in the country is imminent. In 1835, Charles Darwin’s trip to Ecuador’s Galapagos Islands inspired his theory of evolution. The adaptations of the different species to the unique conditions of the Galapagos, a “little world within itself," led him to formulate that adaptation to changing conditions ensures survival. Ecuador is changing, and it must adapt to the mining industry just as the industry adapts to the country.