Ecuador court halts referendums on mining, oil projects

Ecuador’s constitutional court has temporarily suspended President Guillermo Lasso’s decree allowing environmental consultations for mining and oil projects, which sought to speed up permitting before the end of his term this month. 

Popular referendums are a necessary step for any mining company wishing to apply for an environmental licence in Ecuador.

In its decision, the court sided with the country’s largest Indigenous organization, CONAIE, which challenged the decree issued in May. The group argued the executive failed to consult with local communities before “imposing” a norm they qualified as “unconstitutional”.

Ecuador became in 2008 the first nation to grant nature constitutionally protected rights, also giving citizens the right to have a say and stand up for the environment.

While consultations are needed before Ecuador’s environment ministry can issue environmental licences for mining and oil projects, Indigenous communities have been pushing instead for an earlier say on whether the project should proceed at all.

Two mining projects were able to benefit from Lasso’s decree before the halt. One of them was Adventus Mining (TSX-V: ADZN) and Salazar Resources’ (TSX-V: SRL) Curipamba-El Domo copper and gold project, which reached a preliminary investment protection agreement (IPA) for the asset in June.

The project, which still needs to go through two other phases, has already secured the government’s environmental and social impact assessment approval.

Once built, Curipamba-El Domo will be the third operating mine considered key by Ecuador’s government. To date, the country’s only two producing assets are the Mirador copper mine, run by China-backed Ecuacorriente and Lundin Gold’s (TSX: LUG) Fruta del Norte gold mine.

Fruta del Norte is Ecuador’s first large-scale modern gold mine. Credit: Lundin Gold

Atico Mining’s (TSX.V: ATY) La Plata polymetallic asset, previously identified by Lasso as a “strategic project” and “a component of the country’s reactivation plan” had moved forward in recent weeks thanks to the decree. Consultation on the project, however, has been suspended for several days for security reasons.

The court-ordered halt will bring inevitable delays to projects currently in the works, which will be suspended until the legal vacuum is resolved.

Mining was Ecuador’s fourth-largest source of income last year, behind sales of oil, bananas and shrimp, bringing in US$2.8 billion to the state’s coffers.

According to the country’s Chamber of Mining, opposition to extractive activities is blocking nearly US$1 billion in potential investment and 100 projects for the next two years.

An exception is SolGold’s (LSE: SOLG) Cascabel copper-gold project, which last month was granted a 25-year license renewal.

The halted local referendum in Quito could result in a mining ban in the Choco Andino forest, which would affect six gold concessions.

The South American country could also lose about 12% of its 480,000-barrel-per-day crude oil output if voters approve shuttering a key area in the megadiverse Yasuni nature reserve in the Amazon.