ECUADOR Law and Practice Contributed by: Roque Bernardo Bustamante and Claudia Bustamante, Flor Bustamante Pizarro & Hurtado
als, hydrocarbons, water, biodiversity and forest resources. Article 408 of the Constitution mentions that non-renewable natural resources and, in gener - al, products of the subsoil, mineral and hydro - carbon 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 compliance with the environmental princi - ples 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 natu - ral resources and energy preserve and recover natural cycles and allow for dignified living con - ditions. In spite of the fact that all subsoil products belong to the State, the regional autonomous governments in whose territory 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 accord - ance with the law. 1.4 Role of the State in Mining Law and Regulations The role of the state is always grantor-regula - tor. Since the State is also the owner of min - eral 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 govern - ment entities. ENAMI shall have the preferential right to apply to the Ministry of Energy and Mines for the con - cession to any free mining area, in accordance with the certification issued for this purpose by the Energy and Non-Renewable Natural Resources Regulation and Control Agency. It shall also have the right of first option to apply for the concession 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 reg - ulated by the State, independently of those that are granted to a government-owned company or any other petitioner. 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 con - cession holder is satisfied. The mining sector is structured as follows: • the Sectoral Ministry (Ministry of Energy and Mines); • the Mining Regulation and Control Agency; • the National Institute of Geological, Mining and Metallurgical Research; • ENAMI; and • the municipalities in the competences that correspond to them. Article 8 of the Mining Law establishes the crea - tion of the Mining Regulation and Control Agency (ARCOM) as the technical-administrative body in charge of exercising the state power of surveil -
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