Mining rights and title in Ecuador

Mining rights and title

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

The state owns the non-renewable natural resources within the national territory. The state can, on an exceptional basis, delegate the development of extractive sectors to individuals or entities by granting mining concessions for a term of 25 years where the concessionaire will have the exclusive right to explore, exploit, process and sell any metallic minerals within the concession (see question 5).

Once the mining concession has been granted, in large and medium-scale mining, the concessionaire is subject to the following phases and terms:

• up to four years of initial exploration;
• up to four years of advanced exploration; and
• up to two years of economic evaluation of the deposit, which can be extended for an additional two-year period.

During the final phase, the concessionaire must apply for the commencement of the exploitation phase of the project. Within six months of beginning the exploitation phase, the concessionaire, in the large-scale mining category, must sign a mining exploitation contract with the Ecuadorian government, although negotiations may begin during the economic evaluation phase. As indicated, artisanal, small- and medium-scale mining operations do not need to sign a mining exploitation contract with the Ecuadorian government.

Ownership of mining concessions is distinct from ownership of the surface land.

According to the Mining Act, in order to obtain a new mining concession, applicants must participate in a public-tender process in accordance to the Guidelines for Granting Metallic Mining Concessions. If a concessionaire wishes to transfer an existing concession to a third party, authorisation from the mining authorities must first be obtained. However, it is important to consider that a new mining concession cannot be transfer, at least for two years, from the granting date.

The mining cadastre is temporarily closed owing to state internal planning activities by the government. Therefore, it is not possible to apply, reserve or grant new concessions for mining companies.

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

ARCOM keeps a register of all the concessions that exist in the country (mining cadastre). To this end, a reference map of the location of mining concessions can be accessed online at: http://geo.controlminero.gob.ec.

According to the Mining Act, all mining concessionaires should submit annually exploration reports and investment plans in order to have their concessions in good standing.

ARCOM and the National Geological Mining Investigation Institute are the government agencies responsible for carrying out geoscience surveys and technical analyses of national geological information and collecting information for the national database. This information is public, but unfortunately not all is available online.

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

Individuals or corporations may acquire mining concessions, which are granted by the Ministry of Energy and Non-Renewable Natural Resources following a public tender process. The Mining Act recognises four mining categories:

• artisanal;
• small-scale;
• medium-scale; and
• large-scale.

Production ranges for each category are set out in question 5.

Existing mining concessions can be transferred, provided that prior authorisation from the mining authorities has been obtained.

The obligations of mining rights holders, among others, are:

• to pay annual mining conservation patent fees;
• to present annual exploration reports and investment plans;
• to present biannual production reports;
• to pay mining royalties to the state during the exploitation phase;
• to obtain an environmental licence prior to commencing activities;
• to obtain administrative authorisations prior to commencing activities;
• to ensure at least 80 per cent of its workforce are Ecuadorian;
• to comply with the environmental management plan;
• to comply with the regulatory and the mining title duties and obligations;
• to train their personnel;
• to maintain information regarding their operations, etc; and
• to obtain prior administrative authorisation.

What is the regime for the renewal and transfer of mineral licences?

According to article 36 of the Mining Act, a mining concession is granted for up to 25 years and may be renewed for an equal period upon a written application by the mining concessionaire to the Ministry of Energy and Non-Renewable Natural Resources. It is possible to transfer mining rights prior authorisation from the Ministry of Energy and Non-Renewable Natural Resources and is based on a technical report prepared by ARCOM. A new mining concession cannot be transferred for at least for two years from the granting date (see question 8).

What is the typical duration of mining rights?

A mining concession is granted for up to 25 years subject to renewal for an equal period upon a written application by the mining concessionaire to the Ministry of Energy and Non-Renewable Natural Resources (see question 11). There is no specific condition that needs to be meet in order to renew the mining concession.

It is important to note that the Ministry of Energy and Non-Renewable Natural Resources may exercise its legal authority and consequently declares the mining rights terminated in cases where the concessionaires have rendered themselves liable to such termination, for the reasons laid down in the Mining Act. Throughout any termination procedure, the right to due process shall be guaranteed. The process of declaring termination may be officially instigated by the Ministry of Energy and Non-Renewable Natural Resources, in response to a complaint by a third party that has been duly investigated by the Ministry of Energy and Non-Renewable Natural Resources or at request of other ministries with a connection to mining activity. The administrative procedure shall be subject to the terms of the Mining Act and its General Regulations.

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

Domestic and foreign parties are equally entitled to acquire mining rights in Ecuador.

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

According to Ecuadorian legislation, mining is considered to be of public interest, which means it is in a special category and is granted more protection than other private interests, including land ownership. If a concessionaire suffers any form of disruption as a result of a third party’s actions, concessionaires can file an administrative relief action in ARCOM, which can take either direct or indirect preventive measures.

The Mining Act specifically states that, in the event of a dispute arising out of an exploitation contract made between the Ecuadorian state and a mining concessionaire, such a dispute can either be resolved by the local courts or may be submitted to international arbitration. However, the dispute can only be submitted to international arbitration if arbitration provisions are included in the contract. The seat of arbitration must be in a Latin American country as required by the Constitution. Foreign international awards are fully enforceable in Ecuador.

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

Private parties may acquire any form of surface rights, from ownership of the surface area to leases, usufructs, easements, etc. If a mining concessionaire wishes to acquire an easement over a surface area in order to develop its mining operations, it can either enter into an agreement with the surface owner or request that ARCOM impose an easement. Note, however, that foreigners (individuals or corporations) cannot acquire any surface rights within border zones considered to be an area within 20km of the national border (see question 48). Surface rights holders cannot oppose these requests because mining rights are considered of public interest.

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

According to article 315 of the Constitution, the state may participate in the development and management of natural resources through public companies such as ENAMI-EP or through mixed public-private companies in which the state should be the majority shareholder. ENAMI-EP may also participate in partnership or in association with other entities, public or private (see question 22).

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

The Constitution guarantees the right to private property and prohibits any kind of confiscation. On an exceptional basis, the Constitution declares that the expropriation of property - including mining concessions - for reasons of public benefit or social interest may be declared, at a fair value, restitution and payment. However, there are no specific rules for valuation and compensation to determine how much a private individual could receive due to the expropriation of a mining concession.

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

In Ecuador, there are various areas that are considered protected, mainly for environmental conservation. The referendum held in March 2017 amends the Constitution and establishes that the extraction of non-renewable resources, including logging, in protected and urban areas is prohibited under any circumstance.

In spite of the above, it is important to clarify that within protected forests, mining activities can be carried out once an environmental authorisation has been obtained. The specific environmental authorisation will depend on the mining phase of the concession