ECUADOR Law and Practice Contributed by: Roque Bernardo Bustamante and Claudia Bustamante, Flor Bustamante Pizarro & Hurtado
National Assembly issues an Organic Law regulating such consultation. 1.3 Ownership of Mineral Resources In Ecuador, mineral resources belong to the Repub - lic of Ecuador. The State of Ecuador has the right to explore and exploit all minerals and it can do this through the national mining company ENAMI ( Empre- sa Nacional Minera ). However, ENAMI does not have sufficient financial means and technical resources. Therefore, on the few projects it is handling, it has looked for partners, and is open for new projects through the execution of Commercial Agreements. The central government acting on behalf of the State of Ecuador is allowed to grant mining concessions for the exploration and subsequent exploitation of metal - lic and non-metallic minerals. Mining concessions for construction materials are granted by municipalities. Article 1 of the Constitution mentions that the non- renewable natural resources on the territory of the State belong to its inalienable and imprescriptible patrimony. The central government will have exclusive competence over energy, minerals, hydrocarbons, water, biodiversity and forest resources. Article 408 of the Constitution mentions that non- renewable natural resources and, in general, prod - ucts of the subsoil, mineral and hydrocarbon deposits, substances whose nature is different from that of the soil, including those found in the areas covered by the waters of the territorial sea and maritime zones, as well as biodiversity and its cultural heritage and the radio-electric spectrum, shall be the inalienable, imprescriptible and unseizable property of the State. These assets may only be exploited in strict compli - ance with the environmental principles established in the Constitution. The State will participate in the benefits flowing from the use of these resources, in an amount that will not be less than that of the company that exploits them. The State shall guarantee that the mechanisms of production, consumption and use of natural resourc - es and energy preserve and recover natural cycles and allow for dignified living conditions. In spite of the fact that all subsoil products belong to the State,
the regional autonomous governments in whose ter - ritory non-renewable natural resources are exploited or industrialised will have the right to participate in the income received by the State for this activity, in accordance with the law. 1.4 Role of the State in Mining Law and Regulations The role of the State is always grantor-regulator. Since the State is also the owner of mineral resources, it can operate through its wholly owned company ENAMI, but this is rarely the case. When this does happen, however, the State may be simultaneously grantor- regulator and owner-operator through different gov - ernment entities. ENAMI shall have the preferential right to apply to the Ministry of Energy and Mines for the concession to any free mining area, in accordance with the certifica - tion issued for this purpose by the Mining Regulation and Control Agency. It shall also have the right of first option to apply for the concessions to areas whose rights have been extinguished due to expiry, extinction or nullity, or which have been restored to the State. Mining concessions are always granted and regulated by the State, independently of those that are granted to a government-owned company or any other peti - tioner. Once production starts, the role of the State, in addition to controlling environmental, social and labour matters, is to collect royalties and verify that the rule which states that the benefits must always be higher for the State of Ecuador than for the mining concession holder is satisfied. The mining sector is structured as follows: • the sectoral ministry – the Ministry of Environment and Energy (recently the Ministry of Energy and Mines merged with the Ministry of Environment, thus, forming the Ministry of Environment and Energy); • the Mining Regulation and Control Agency; • the National Institute of Geological, Mining and Metallurgical Research; • ENAMI; and • the municipalities, where they are competent (eg, concessions for construction materials).
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