ECUADOR Law and Practice Contributed by: Roque Bernardo Bustamante and Claudia Bustamante, Flor Bustamante Pizarro & Hurtado
1.7 Mining: Security of Tenure Grant, Exploration and Exploitation Stages Mining concessions are granted through a com - petitive process where the first applicant has the right to match other offers, except in the case of applications made by ENAMI. Unfortunately, the mining registry and procedure for new applications, called “ Catastro Minero ”, has now been closed for almost seven years and it is impossible to predict when it will be reo - pened. Therefore, the only possible way to enter now is to partner with somebody who already holds mining rights or with ENAMI. In accordance with the mining law, a mining con - cession has up to four years for initial explora - tion, up to four years for advanced exploration, up to two years (renewable by an additional two years) on economic evaluation and what remains of up to 25 years on exploitation. The exploita - tion period can be extended for up to another 25 years. Once the initial exploration period or the advanced exploration period, as the case may be, has been completed, the mining concession - aire will have a period of up to two years to carry out the economic evaluation of the deposit and request, before its expiry, the beginning of the exploitation stage and the corresponding sub - scription of the Mining Exploitation Contract, in the terms indicated in this law. The mining con - cessionaire shall have the right to apply to the Ministry of Energy and Mines for an extension of the period of economic evaluation of the deposit for a period of up to two years from the date of the administrative act accepting that application. In the event that the mining concessionaire does not request the start of the exploitation stage in the terms indicated in the foregoing, the mining
concession shall be declared extinguished by the Ministry of the Sector. Within six months from the resolution declar - ing the beginning of the exploitation stage, the mining concessionaire must sign with the State, through the Ministry of Energy and Mines, a Min - ing Exploitation Contract containing the terms, conditions and terms for the construction and assembly, extraction, transportation and com - mercialisation stages of the minerals obtained within the limits of the mining concession. The holder of a mining concession may not carry out exploitation work without having previously signed the respective contract. Fees, Royalties and Taxes Maintenance fees per hectare “ patente ” must be paid annually during exploration and exploita - tion stages, on a scale that is adjusted annually in proportion to the minimum wage of Ecuador (USD460 for the year 2024). For small-scale mining, the patente is equivalent to 2% of the minimum wage (USD9.2 per mining hectare). For medium and large-scale mining, the patente shall be paid as follows: • initial exploration, 2.5%, equivalent to USD11.50 per mining hectare; • advanced exploration and economic evalu - ation, 5%, equivalent to USD23 per mining hectare; and • exploitation, 10%, equivalent to USD46 per mining hectare. The benefits of the project are understood to be the revenues from the sales of minerals, minus amortisation of investments, operating costs and all pertinent taxes, government royalties and profit-sharing. The benefit to the company must be lower than the benefit to the State that
164 CHAMBERS.COM
Powered by FlippingBook