Ecuador Digs Deep
A new mining code, improved infrastructure and great deposits have started to draw some of the bravest miners to Ecuador. LatAm INVESTOR investigates Latin America's newest mining frontier...
Ecuador is bidding to become the latest investment destination on the region’s mining map. The country is found on the west coast of South America and crossed by the Andes mountain range. These are precisely the geographic and geologic conditions that convert into competitive advantages when coupled with the abundance of natural resources.
In the last decade the South American country has experienced a sustained rise, not just in its economic indicators and GDP, but also in social development, with the improvement of living standards for its citizens, especially the most vulnerable.
The development of the national mining industry has the full support of the National Government. Just in 2015 the political decision to create a Ministry specifically dedicated to the mining sector reflects the will to advance along the right path. Moreover, key reforms were made to the mining regulation and incentives were created to attract investment through the Law of Public Private Partnerships, which guarantees not only an agile institutional structure but also to serve businesspeople and citizens.
In this context Ecuador counts with at least three fundamental pillars, which position it as the new destiation for the mining industry in the region. 1) The commitment to the sector and the political stability of the National Government, 2) The great mining exploration potential, and, 3) The competitive advantages that investment in the sector offers. This has generated a climate of confidence for national and international investment.
The commitment of the National Government to investors came about through the legal and tax reforms to encourage the arrival of fresh capital for the development of the industry. For example, the Government introduced the return of VAT on exportations and the signing of tax contracts for 15 years (renewable).
Great conditions
Moreover the strong public investment made in infrastructure (roads, ports, airports) in recent years has transformed the country into a leader in Latin America, according to the World Economic Forum. Another factor is that Ecuador has unbeatable geological conditions for the current and future development of large-scale mining projects. Especially when you take into account the fact that only 5% of the country’s territory has been explored. Additionally, the current mining projects have a high ore grade, which makes the investment even more attractive.
"a land of opportunities for mining…"
Of course the development of the mining industry is linked to the operating costs and access to resources. In this sense Ecuador has an electricity price that’s lower than the regional average. Indeed the country has 12 electricity generation projects, nine of which are hydroelectric and provide 8,300MW of clean energy. So this means there is an abundant supply of water, which you can even find in the areas of the mining projects.
At present Ecuador has five strategic mining projects: Mirador, Fruta del Norte, San Carlos Panantza, Río Blanco y Loma Larga, which have a projected total investment of approximately $8billion between now and 2023. Thereby strengthening the security environment for investors, who, in the words of Ron Hochstein (CEO of Lundin Gold) see in Ecuador, “a land of opportunities for mining.”