Mining 2026

ECUADOR Law and Practice Contributed by: Roque Bernardo Bustamante and Claudia Bustamante, Flor Bustamante Pizarro & Hurtado

3. Climate Change, Energy Transition and Sustainable Development in Mining 3.1 Climate Change Effects Climate change is not, in general, a major concern for the mining industry in Ecuador. The big issue is com - munity consultations. 3.2 Climate Change Legislation and Proposals Related to Mining No legislation is being passed regarding mining and climate change. What is being discussed is the right of the population, whether indigenous or not, to vote in a referendum or other type of consultation against mining projects. 3.3 Sustainable Development Initiatives Related to Mining Ecuador has many NGOs; some of them promote sustainable development, but most of them simply oppose mining projects, and blocking mining devel - opment seems to be their ultimate goal. 3.4 Energy-Transition Minerals There are no legislative initiatives related to the increasing demand for the so-called energy-transition minerals, such as lithium and nickel, in Ecuador. Politi - cal opposition to mining has caused the government to refrain from leading any mining initiative. 4. Taxation of Mining and Exploration 4.1 Mining and Exploration Duties, Royalties and Taxes The main rule regarding the taxation of mining in Ecua - dor, and which originates in the Constitution, is that the benefit to the State shall always be higher than the benefit to the operating company. The benefit to the State is mainly formed of a 12% share of mine profits, a 25% income tax, royalties between 3% and 8%, and 15% VAT. It is important to note that community support or generation of employ - ment is not treated as a benefit for the purposes of satisfying the Constitutional rule.

Criminal Code and comes with severe penalties. Indi - viduals engaging in unauthorised extraction, exploi - tation, exploration or commercialisation of mineral resources face imprisonment of 16 to 20 years. If the activity causes environmental damage, imprisonment increases to 22 to 26 years. In cases where the activ - ity is linked to organised crime or armed groups, the penalty escalates to 26 to 30 years, along with fines ranging from 1,000 to 1,500 times the unified basic salary (the minimum wage for private sector workers se annually by the Ministry of Labour). Despite these severe penalties, illegal mining persists as a pressing issue. Mining concession holders are legally required to report instances of illegal mining within their concessions. However, such reports often fail to produce effective results, highlighting the ongo - ing challenges in combating this issue. 2.9 Good and Bad Examples of Community Relations/Consultation Impacting Mining Projects The worst example is Cooper Mesa v Republic of Ecuador , regarding a large copper deposit. After sev - eral years of debate between the company and the community leaders, and independently of winning in court, the government of Ecuador declared unilateral termination of the mining concessions. This resulted in Cooper Mesa winning an arbitration award. The pro - ject is now being developed by ENAMI in association with the Chilean mining company CODELCO. One of the difficult issues to overcome in Ecuador is illegal mining. Lately, the government has been mak - ing important efforts to combat this, but it has not yet been controlled (see 2.8 Illegal Mining ). The best example of community relations/consultation is the Fruta del Norte Project that, with a good inte - gration programme with surrounding communities in place, is now producing gold on a large scale.

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