Ecuador court issues setback for US$3B copper project

Ecuador’s constitutional court decided against processing appeals to resume the disputed US$3 billion Llurimagua copper-molybdenum project being promoted with the help of Chile’s Codelco.

The 982-million-tonne copper asset about 80 km northeast of Ecuador’s capital of Quito was also being advanced by the country’s national mining company, Enami EP.

This week’s ruling supports a March 2023 decision by Imbabura province’s supreme court to suspend Codelco’s environmental license for Llurimagua, Ecuadorian paper El Universo reported.

As part of the ruling, Enami EP will have to resume consultation on the project and prepare a new environmental impact study and environmental management plan for the advanced exploration stage project.

Court history

Tensions between the two miners began brewing after Ecuador reformed its mining law in 2020, threatening Codelco’s right to 426 sq. km of exploration ground.

Cooperation between the two state-run companies came to a halt in 2021, with Codelco taking Enami EP to an international arbitration court. The world’s largest copper producer claimed its partner had failed to fulfill its part of the development agreement.

The two nations resumed talks over their partnership in Llurimagua in 2022. But other than Codelco dropping the lawsuit against Enami, no further details of the agreement have been disclosed.

Ecuador is rich in minerals and metals, but its mining industry is relatively new and lags behind that of neighbouring countries like Chile and Peru. This is partly due to court decisions and opposition from indigenous communities to mining projects.

The administration of current President Daniel Noboa is seeking to promote greater mining activity as a means of economic development, despite the legal and community-based challenges that have hindered progress in the sector over the past decade.