ECUADOR Law and Practice Contributed by: Roque Bernardo Bustamante and Claudia Bustamante, Flor Bustamante Pizarro & Hurtado
1. Mining Law: General Framework 1.1 Main Features of the Mining Industry Ecuador’s main export for several decades has been oil. Minerals have not historically constituted a major export of Ecuador, and the first large-scale mines only started production in November 2019, when the Fruta del Norte mine, operated by Lundin Gold through its local subsidiary Aurelian, started producing gold, and the Mirador mine, operated by Chinese Tongling and China Railway through its local subsidiary Ecuacor - riente, started producing copper. Both projects are located in the south-east of Ecuador, in Zamora Chin - chipe province. It is expected that together the pro - jects will have combined sales of more than USD1 billion per year, an amount which will make mining one of Ecuador’s biggest exports. On 10 December 2019, the Fruta del Norte mine pro - duced its first export: 177 tons of gold concentrate. A total investment of USD2.7 billion has been made in the project and it is expected to produce 310,000 ounces of gold per year and 400,000 of silver. In 2020, the Mirador project, owned by Ecuacorriente, also started production at the first large-scale copper mine in Ecuador. In June 2024, an exploitation contract was signed for the Cascabel project, making it the third large-scale mining project in Ecuador to transition into the exploitation phase. The construction of the mine is anticipated to commence in the near future. Ecuador has not yet been fully explored for minerals and its potential has, in recent years, attracted major multinational companies such as Newcrest (now New - mont), Barrick, Anglo American, BHP and Codelco. Although mining activity is fully regulated and legally permitted, political opposition from different groups has meant that investment progress has been slow, delayed by the need to overcome the legal and con - stitutional objections that are regularly brought against mining projects. 1.2 Legal System and Sources of Mining Law Ecuador’s legal system is a civil one. The main sources of legislation that apply to mining are the Ecuadorian Constitution, the Mining Law and the Environmental Law, plus the regulation applicable to all commercial activity, including the Civil Code, the Labour Code and
various tax laws. There are also several subsidiary reg - ulations that detail further the procedures for obtaining and maintaining a mining concession, as well as the full set of requirements governing environmental and social matters. The Ecuadorian Constitution provides that natural resources belong to the State of Ecuador, that their exploitation shall be conducted in accordance with all environmental and social provisions and that the ben - efit to the exploiting company shall always be lower than the benefit to the State of Ecuador. It also pro - vides that environmental consultations and engage - ment between mining companies and indigenous communities shall be conducted in pertinent cases in accordance with the treaties entered into by Ecuador. The Mining Law and regulations cover all aspects of the granting of a mining concession, payment of main - tenance fees, royalties, passing into different stages, including advanced exploration and exploitation, and all other aspects concerned with a mining conces - sion. The Environmental Law and regulations set out all matters regarding environmental licences indispen - sable for mining activities. The Civil Code is a set of general rules applicable for all matters when there is no special provision for a particular matter. The Tax Code and related laws and regulations also apply to mining activities, in addition to the Labour Code for all employment matters. All Ecuadorian legislation is applicable to companies operating in Ecuador and therefore all mining sub - sidiaries holding mining concessions in Ecuador are subject to all the laws applicable in Ecuador. The Con - stitutional Court of Ecuador has the capacity to qualify requests for public consultation on different matters, including mining matters. Its decisions are binding. While several international treaties provide for con - sultation with indigenous communities, a law defining to whom, when and how a community consultation should be made has not been passed, in part due to the Constitutional Court prohibiting the issuance of a ministerial decree in that regard. In March 2023, an Executive Decree was issued regu - lating the environmental consultation process; howev - er, this Executive Decree will only be in force until the
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