On January 29, 2009, the New Ecuadorian Mining Law (the “New Law”) was published in the Ecuadorian Government’s official registry and came into force.
The New Law provides welcome relief to international miners active in Ecuador who have significant interests in the massive gold, silver and copper deposits located in the south of the country.
The New Law reflects the Government’s belief that mining is beneficial for the country, and that it must be carried out in a sustainable manner. Article 4 of the New Law holds that environmentally responsible mining is in the public interest of Ecuador. The New Law gives companies the right to hold unlimited numbers of mining concessions, renewable, with 25-year terms. The Government will levy a royalty of no less than 5%, with portions of the revenue collected directed to local mining regions. A new competitive process will also be established to award concessions.
While environmental and peasant groups are not happy with the New Law (the Confederation of Indigenous Nationalities of Ecuador says the New Law favours transnational mining companies and plans civil-disobedience campaign to prevent projects in areas where indigenous communities live), Ecuadorian President Rafael Correa has stated that he would not back down in the face of protests from these groups. During his recent state of the State speech to the National Assembly, Correa called opponents of the law “fundamentalists” who would leave Ecuador a country of “beggars sitting on a sack of gold” and stated that “it is necessary to propel responsible mining.”