An Industry Worth Its Weight in Gold

Originally published in Spanish in the Sunday, December 16, 2007 edition of El Comercio newspaper, Quito, Ecuador.

Translated by Ecuador Mining News

The thirty international mining companies operating in Ecuador received Carondelet’s backing when President Rafael Correa stated that mining will be the engine of the country’s development.

The metallic mineral wealth of Ecuador has world-class deposits. Aurelian Resources’ Fruta del Norte project has proven resources of 13.7 million ounces of gold and Corriente Resources’ Mirador project has 11 billion pounds of copper. In monetary terms, they are equivalent to $11 billion and $33 billion, respectively.

Mining’s benefit, however, goes beyond the simple income that the government can achieve via royalties, which will be imposed during the Constituent Assembly. This industry generates jobs and community projects, and invests hundreds of millions of dollars to revitalize the national economy.

But foreign mining firms also need reassurance and depend on Montecristi’s decisions to continue their operations in Ecuador.

If the new legal framework imposes a disproportionate royalty that reverses the viability of their projects, revokes their concessions, or bans open-pit mining, the companies will migrate to neighboring countries that offer better conditions, such as Peru and Chile.

Violent demonstrations by some members of the communities surrounding the mining projects also diminish international confidence. These people are inflamed by the apocalyptic predictions of environmentalists who forecast total destruction if mining operations begin. Thus, the Assembly has an historic opportunity to limit the role of internationally-financed extremist NGOs.

If Montecristi catches Carondelet’s optimism, foreign mining companies will be the country’s best allies in the drive to reduce poverty and eliminate the irony of maintaining impoverished communities literally settled on million-dollar deposits of gold, silver and copper.