A few days ago, on September 24, NASA announced that it managed to bring a sample of an asteroid to Earth that is expected to provide unique information about the origin of life and the formation of the solar system about 4.5 billion years ago.

It is the first time that the US space agency has managed to bring back a sample from an asteroid. The NASA mission, named Osiris-Rex, hopes to have collected 250 grams of debris from the Bennu asteroid that contains molecules dating back to the formation of the solar system.

These asteroids are debris from when the planets formed 4.5 billion years ago. They are like time capsules, equivalent to dinosaur fossils that allow us to know what was happening millions of years ago. “In this case, with our mission, we are traveling billions of years back in time,” NASA planetary scientist Lucas Paganini explained to the EFE agency.

Beyond the relevance of the news for scientific research into the history of life on our planet and the solar system. This fact constitutes an unquestionable step forward in the advancement of extraterrestrial mining exploration.

In this same space in MINERGIA, I have written about the initiatives that exist to develop space mining, from both, the governments and private enterprises, because we understand that earthly resources are limited and also because of the captivating idea of ​​providing us with minerals necessary for our modern lives without affecting our environment and nature. That idea, which seems like a fantasy similar to science fiction, is getting closer and closer and could become a reality in a period of around twenty years, which is barely a breath in relation to the lifespan of humanity.

“The Bennu asteroid is a celestial body approximately 500 meters in diameter – a little higher than the Empire State Building -, which is located in the asteroid belt between Mars and Jupiter,” reports the Mexico Minero website, and adds: “What makes it so special is its composition, as it contains essential minerals and materials for the space and terrestrial industry, Among those are precious metals, such as platinum and gold, as well as vital resources such as water and organic compounds.”

Asteroids and other space bodies like Bennu house massive amounts of critical minerals such as gold and platinum. In fact, the reserves of these metals that exist on our planet are of extraterrestrial origin. According to a scientific study, published in the journal Nature, the theory is confirmed that the gold we currently have on Earth comes from space, more specifically from meteorites that hit our planet 200 million years after its formation. During the Earth’s creation, molten iron sank into the interior of the planet and formed what is now the core. On its descent, it dragged down precious metals, such as gold and platinum.

But, Bennu also contains water, and this is probably the most valuable and important resource. Water (two hydrogen atoms bonded to one oxygen atom) can be used for drinking and can also be separated into its basic elements to obtain breathable air and fuel for human space vehicles. This type of news is very interesting because the biggest challenge of human activities in space is linked to the provision of water and fuel for missions, manned or unmanned.

Meanwhile, in Ecuador, a country rich in mining resources, we are still entangled in endless debates for and against mining; other countries have overcome this inert debate and are focused on finding alternative solutions to provide us with the minerals and water that are fundamental for the future of humanity.

For now, we should not worry because we do not have any options for space missions for extraterrestrial exploration to be launched from Ecuador. Perhaps there may be an interested entrepreneur, but, after a careful investigation, he will realize that it is impossible, not because of the complexity of such an adventure, but because his project would have to have an environmental license that, at the moment, cannot be obtained or because, even if it were possible, he would be the target of a protection action or request for a referendum promoted by anti-mining groups. As a result, in Ecuador, carrying out legal mining exploration is an impossible mission.

1. President Noboa has announced a referendum with several questions to improve the country’s security and economy. Along with others, there is question Nº 3, which reads as follows: Do you agree that, to eradicate illegal mining, the areas mentioned in Annex 6 should be declared territories of national interest to assess, on a one-off basis, the relevance of revoking mining concessions to guarantee the proper use of mineral resources and combat organized crime?

2. The question’s wording could be confusing; therefore, this document aims to clarify the scope of the question after reviewing Annex 6, which has been filed into the Constitutional Court for its assessment of constitutionality.

3. After reading the rationale for the question, Annex 6, it’s clear that the government is seeking an additional tool to combat illegal mining. It considers that such activity has repercussions on national security, the environment, and tax collection, among others. Apart from the problems that illegal mining activity brings, the government considers that it is “part of the chain of trafficking in arms, explosives, money laundering” and that it is a threat to national security. Annex 6 describes that authorities have found that many of these activities are carried out within existing mining concessions, and some illegal miners work with the complicity of the mining concessionaires and landowners.

4. Therefore, the question seeks for the state to revoke the concessionaires’ mining concessions that have become complicit in illegal mining following a process of investigation and sanction by the mining authorities. Annex 6 clarifies that such a process would be a “special simplified process”. The evaluation of the territories of “national interest” will be determined by the Energy and Non-Renewable Natural Resources Regulation and Control Agency (ARCERNNR), starting by declaring the following: Buenos Aires, San Lorenzo, Yutzupino, Chinapintza, etc. However, the application can be extended to any part of the territory.

5. From a legal point of view, the question ratifies the general principles already contained in the Constitution and laws of Ecuador. Under the principle of objective environmental liability, operators (concessionaires) are presumed to be responsible for damage and activities occurring within their mining concessions, and any third-party activity is presumed to have been authorized by the concessionaire unless it proves otherwise (presumption of environmental liability). The mining concessionaire could prove it did not authorize an illegal operator through a denounce or administrative relief action filed before to the mining authorities.

6. The current legislation already has a regulated process for declaring a mining concession’s caducity (revocation or extinction) due to environmental damage or illegal exploitation. However, in this case, Annex 6 clarifies that to instrument the revocation in the cases under this question, a “special simplified process” will be in place. Currently, the authority initiates an investigation process, either within territories of national interest or in any place where mining concessions exist, to determine if there have been exploitation, processing or commercialization activities. If the complaints or appeals proposed by the mining concessionaire are not provided, it will be understood that these are activities authorized by the titleholder of the mining area, and then the title will be revoked (caducity declaration). Although in the case of this particular question, a “special simplified process” will be, there are no material changes in the principles of application (due process, right of defense, the opportunity to provide evidence, etc.).

7. In sum, the consultation process in the referendum question does nothing to change what is already in the law to revoke mining concessions for illegal exploitation (caducity process). However, including the specific matter in the referendum raising the protection category of the industry to “national interest” sends a strong political message against illegal mining that benefits the legal and responsible industry.

© TobarZVS 

This publication contains information of general interest and does not constitute legal opinion on specific issues. Any analysis will require legal advice from the Firm.

Ten years ago, dear friends invited me to contribute to this column. Minergía was established as a magazine for disseminating and discussing topics of general interest in the mining and energy sectors, addressing a gap in publications within industries critical to Ecuador’s development. Over the past decade, through considerable effort, Minergía has established itself as the most significant publication on mining and energy issues in the country, expanding its reach to Colombia and Canada, where its influence and importance have continued to grow.

Although it is often stated that there are no coincidences in life, this venture aligns with the most significant advancements the mining industry in Ecuador has achieved throughout its history.

In 2015, the mining industry was still recovering from the damage inflicted by Constituent Mandate No. 6 (known as the Mining Mandate) of April 2008. This mandate, issued by the Constituent Assembly, unlawfully confiscated more than half of the concessions in force at that time. The most radical faction of Rafael Correa’s socialist government managed to pass this Constituent Mandate with the clear intention of obliterating the mining industry, and they almost succeeded.

The same government subsequently adjusted its stance and began supporting a responsible mining industry that contributes at least half of its profits to the republic, which owns the mineral resources. The constituent assembly enacted the 2009 Mining Law, a genuine legal eyesore arising from ‘ingenious’ international mining lawyers -engaged by Correa’s government- who claimed to have approved a cutting-edge law in the region.

It was not; the 2009 Mining Law is arguably the worst mining legislation in the world. I shall not elaborate on all the shortcomings of the 2009 Law, which, being confusing and overly regulated, would not receive the approval of any legal scholar.

Despite the new mining regulations introduced in 2009, exploration companies upheld their homework by announcing several significant deposits, including Mirador, Panantza-San Carlos, Quimsacocha (now known as Loma Grande), Rio Blanco, and, of course, Fruta del Norte.

On 5 March 2012, the first exploitation contract was signed between Ecuador and Ecuacorrientes, a company owned by Chinese interests, for the development and extraction of the Mirador project.

However, 2015 marked a significant turning point for Ecuador’s mining industry, as the oil price had plummeted, causing substantial harm to the state’s fiscal coffers. This situation compelled the government to concentrate on mining as an alternative source of investment and tax revenue, urgently needed in a dollarised economy. That year also saw the establishment of the Ministry of Mining as the regulatory authority for mining policy, along with plans to reopen the mining cadastre, which had been closed for many years.

In the same year, Lumina Gold Corp, a Canadian company founded by Canadian entrepreneur Ross Beaty, one of the world’s most esteemed mining entrepreneurs, acquired the Cangrejos project, which had a long history of exploration by several operators.

In 2015, the international industry also focused on Ecuador with the announcement of the discovery of Cascabel by the Australian company SolGold, a copper and gold deposit typically found only once every decade. This discovery earned Cascabel the “Best Discovery Award” from the organisation Mines & Money, which also honoured SolGold’s CEO, Mr Nick Mather, as “Best CEO of a Mining Company” and recognised him as “Person of the Year” by the Canadian newspaper The Northern Miner.

The Mining Exploitation Contract for the Fruta del Norte project in Ecuador was signed on 14 December 2016 between the Ecuadorian government and Lundin Gold. This contract permitted Lundin Gold, a Canadian company, to operate one of the largest gold mines in the country, located in the province of Zamora-Chinchipe. The mine commenced commercial production in November 2019.

In March 2016, the Minister of Mining announced the opening of the mining cadastre during the PDAC in Toronto, using an auction process based on investment and work plans that sparked the interest of worldclass big players. Between 2016 and 2017, Anglo American, BHP, Newcrest, Hancock, and Forescue established a presence in the country.

While this was happening, other smaller projects were advancing their economic studies before jumping to feasibility, such as the La Plata project (Atico Mining), Adventus’ Domo (now Silvercorp) and Dundee Precious Metals’ Loma Larga.

The narrative of this decade also underscores the rediscovery of the Warintza project, situated in the province of Morona Santiago, Ecuador. In 2001, Lowell Mineral Exploration, founded by the esteemed geologist David Lowell, carried out initial drilling that confirmed the existence of a significant porphyry copper system. Years later, Solaris Resources, a Canadian company, acquired the project and, in 2020, initiated an ambitious exploration programme. The results have shown that Warintza possesses considerable potential as a worldclass mining district, featuring extensive deposits of copper and other strategic metals.

In the 2015 Fraser report, Ecuador improved its ranking by six points, allowing it to escape the unacceptable list of the ten worst jurisdictions. According to that year’s report: “Ecuador experienced the most significant improvement in Latin America and the Caribbean this year, and its progress enabled the jurisdiction to move out of the bottom ten. The country enhanced investor perceptions in several areas, including infrastructure (+19 points), availability of labour and skills (+6 points), and uncertainty surrounding disputed land claims (+6 points).” Not surprisingly, since that year, Ecuador has begun to ascend the Fraser ranking due to several public policy developments, such as the creation of the Ministry of Mining in 2016, the elimination of substantial taxes like the windfall profit tax, and the opening of the mining cadastre.

Since that year Ecuador has begun to climb the Fraser ranking due to several public policy developments such as the creation of the Ministry of Mining in 2016, the elimination of huge taxes such as the windfall profit tax and the opening of the mining cadastre.

Despite this wave of good news, the country failed to capitalise on and benefit from these partnerships in managing its mining resources. The contradictory and excessive regulatory burden was exacerbated by attacks from far-left activist groups that utilised constitutional mechanisms, such as referendums and protective actions, to legally challenge and suspend mining operations. The Constitutional Court, which had generated much positive expectation upon its formation in 2019, surprised many with rulings influenced by anti-mining activist ideology, raising concerns among investors regarding their trust in Ecuador’s mining sector.

In 2017, just over a year after the mining cadastre was reopened, President Moreno succumbed to blackmail from the Confederation of Indigenous Nationalities (CONAIE) and closed it once more. To this day, it has not been possible to reactivate it. Unfortunately, significant players such as Anglo American and Fortescue exit the country, and we face the risk of losing other big players, like Newcrest (now part of Newmont) and BHP.

In 2024, Ecuador’s mining exports saw a decline compared to the previous year. According to data from the Central Bank of Ecuador, between January and November 2024, mining exports generated USD 2.814 billion, marking a 9.2% decrease compared to the same period in 2023. Despite these challenges, the Chamber of Mines of Ecuador estimates that mining exports in 2024 could reach levels like those in 2023, when a record USD 3.324 billion was recorded.

Last year, the mining contracts for Cascabel and Cangrejos were negotiated, amounting to over five billion dollars ($5 billion) combined. The mining industry continues to make progress despite the challenges.

Minergía will continue in this new decade as a witness to the successes and challenges of the mining industry. Congratulations on your anniversary!

© TobarZVS 

This publication contains information of general interest and does not constitute legal opinion on specific issues. Any analysis will require legal advice from the Firm.