Mining Law in Ecuador
General Rules for all Mining Concessions in Ecuador
Pursuant to the Ecuadorean Constitution, the state owns all minerals and non-renewable natural resources, but mining concessions can be granted to companies and individuals. Concessionaires have the exclusive right to explore, exploit, process and sell any metallic minerals within the concession. Ownership of mining concessions is distinct from ownership of the surface land.
Applicable Ecuadorean mining laws recognizes four categories (or regimes) of mining concession rights: artisanal, small-scale, medium-scale and large-scale mining.
A mining concession is granted for up to 25 years and may be renewed for an equal period. Once the mining concession has been granted, in medium-scale mining and large-scale mining the concessionaire shall comply with the following phases and terms:
(a) up to four years of initial exploration, i.e., surface exploration including geological mapping, geophysical surveys, and geochemical sampling (stream sediments, soils & rocks) and trenching (“Initial Exploration Phase”);
(b) up to four years of advanced exploration, including drilling (“Advanced Exploration Phase”); and
(c) two years of economic evaluation of the deposit (pre-feasibility and feasibility studies), which can be extended for an additional two-year period, and during which periods drilling activities may continue (“Economic Evaluation Phase”).
During the Economic Evaluation Phase, the concessionaire must apply for the commencement of the exploitation (i.e., construction, operations, closure & remediation) phase of the project (“Exploitation Phase”). Within six months of beginning the Exploitation Phase, concessionaires in the large-scale mining category must sign a mining exploitation (i.e., mine development) contract with the Ecuadorean government fixing the payment of taxes, royalties and advance royalties, although negotiations may begin during the Economic Evaluation Phase.
The production ranges for small-scale mining of metallic minerals are up to 300 tonnes of ore in underground mining, up to 1,000 tonnes of ore in open-pit mining and up to 1,500 cubic metres of ore in alluvial mining.
The production ranges for medium-scale mining of metallic minerals are 301 – 1,000 tonnes of ore per day in underground mining, 1,001 – 2,000 tonnes per day in open-pit mining and 1,501 – 3,000 cubic meters per day in alluvial mining. Any range that exceeds those established for medium-scale mining is considered large-scale mining.
Artisanal, small- and medium-scale mining operations do not need to sign a mining exploitation contract with the government. Artisanal and small-scale mining categories are entitled to carry out exploration and exploitation activities simultaneously.
Required Permits during Exploration
Prior to engaging in mineral exploration or mining activities in the initial exploration phase (surface exploration): (a) the Ecuadorean Ministry of Environment (the "MOE") must issue an environmental registration; (b) the Water Authority (the "SENAGUA") must issue a report on the possible effects on surface and/or ground water bodies and confirmation of compliance with the order of priority relating to the right of access to the water; and (c) the concessionaire must submit a sworn statement declaring that the proposed exploration or mining activities will not adversely affect public infrastructure, ports, beaches and sea-beds, telecommunication networks, military installations, oil industry infrastructure, aeronautical installations, electrical networks and infrastructure, or archaeological, natural or cultural remains.
Prior to engaging in the Advanced Exploration Phase: (a) the MOE must issue an environmental license which includes a public consultation process; and (b) SENAGUA must issue a water permit for industrial use of water.