THE ANDEAN COPPER BELT: The Australian mining footprint in Ecuador
By Claire Burgess & Liz Downes | Image: An indigenous woman from the Amazon protests the environmental policies of President Lenin Moreno’s government, in Quito, Ecuador, March 12, 2018 (AP photo by Dolores Ochoa).
Since 2016, around seven million hectares of land in Ecuador has been sold by the government, under zero public scrutiny, to international mining companies keen to take advantage of the country’s promise of untapped reserves of copper and other base metals. Around two thirds of the concessioned land covers protected forests and Indigenous territories. In the globally favourable copper market, Ecuador plans to increase its competitiveness with respect to its Andean Copper Belt neighbours, Peru and Chile. President Guillermo Lasso is executing policy changes to make the country more investment-friendly, promoting ‘environmentally sustainable’ mining which provides raw minerals for the climate transition. Ecuador expects mining investments to reach $US 4.2 billion by 2025.
As of November 2021, Australian companies held 33.3% of total mining concessions covering 706,039 hectares. Companies include BHP, SolGold, Newcrest, Fortescue Metals Group, Hancock Prospecting, Titan Minerals, Pelorus Minerals and Sunstone. SolGold, a subsidiary of DGR Global, has the biggest footprint. The company owns 220 exploration licenses – around 60% of the Australian investment in Ecuador. Several of SolGold’s priority projects have encountered strong resistance from local communities due to lack of free and prior consent, incomplete environmental assessments during the licensing process, and aggressive socialisation tactics.
SolGold’s flagship project is Alpala-Cascabel, located in Ecuador’s northwest. The project, expected to be in production by 2025, is considered a lucrative investment. In a 2019 report Ecuador’s Ministry of Energy and Mines said the mine could become the world’s sixth largest copper producer, with an average output of 150,000 tonnes per year. Other Australian heavyweights, BHP and Newcrest, own significant shares – 13.6% and 13.5% respectively. While investors talk up Cascabel’s potential, reports cite concerns about the project’s environmental assessment process and its proximity to existing mining conflict zones near the Colombian border.
BHP has 14 copper exploration concessions, mostly in the northwestern province of Imbabura, covering megadiverse areas in national park buffer zones. The company is relying on its high-value Cascabel stake to boost shareholder confidence in its other investments. Community resistance peaked in early 2020 with regional assemblies, the ratification of local government ordinances detailing the region’s stance against mining, and road blockades. In November 2021 another regional assembly was held which unanimously rejected attempts by BHP to socialise communities within its Santa Teresa concessions.
Hanrine, an unlisted subsidiary of Hancock Prospecting, owns nine concessions in the provinces of Pichincha and Imbabura, two of which have been the locus of armed conflict and human rights abuses since 2019. From April 2021 the company made several attempts at forcing entry to set up camp, blocking access to residents of one town and hiring military police to break up peaceful protests. In 2020 Hanrine bid for a $400 million stake in the grand-scale Llurimagua copper project, currently joint-owned by state mining company ENAMI and Chilean copper giant Codelco. Works at Llurimagua have been on hold since 2018, due to investment battles and an ombudsman’s report which posited that the project will be one of ‘the highest-risk mines’ in the world, due to the region’s topography, seismic activity, biodiversity and decades of local resistance against mining.