ECUADOR Trends and Developments Contributed by: Roque Bernardo Bustamante and Claudia Bustamante, Flor Bustamante Pizarro & Hurtado
Flor Bustamante Pizarro & Hurtado Office 803 Torre 6 Building Av. 6 de Diciembre y Juan Boussingault Quito Ecuador Tel: +59 399 946 3866 Email: roque.bustamante@fbphlaw.com Web: www.fbphlaw.com
Large-Scale Mining Exploitation Contracts in Ecuador General considerations of Ecuador’s legal framework for mining Article 1 of the Ecuadorian Constitution provides that all non-renewable natural resources within Ecuador’s territory belongs to the State’s patri - mony. Given the economic, social, political and environmental significance of non-renewable natural resources, this sector is considered one of the country’s strategic sectors, falling under the exclusive decision-making power and con - trol of the State. The Constitution mandates that the State will establish state-owned companies to manage strategic sectors; however, exceptionally, the State may delegate participation in the strategic sector to the private sector if it lacks the neces - sary economic or technical capacity to carry out exploration or exploitation activities directly. In the mining sector, this delegation is carried out through the granting of mining concessions. A mining concession is an administrative act that grants a mining title, providing the holder with the exclusive right to prospect, explore, exploit,
process, smelt, refine and sell all mineral sub - stances that may exist and be extracted within the area of the concession, allowing them to benefit from the economic returns generated by these activities. However, since non-renewable natural resources are part of the State’s patrimony, the Constitu - tion provides that the State must share in the profits generated from the exploitation of these resources, ensuring that its share is no less than that of the company carrying out the exploita - tion. Mining titles have a duration of 25 years, which may be renewed for additional 25 years. These 25 years are divided into distinct phases and periods, as follows: • Exploration phase: (a) initial exploration period: four years; (b) advanced exploration period: four years; and (c) economic evaluation of the deposit: two years, renewable for an additional two years.
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