Ecuador: Over 80% of Cuenca voters backed large-scale mining banPublished by MAC on 2021-02-09
Source: Reuters, Bloomberg
The proposal was on the ballot for some 435,000 residents during Sunday's national election.
Voters in the city of Cuenca backed a prohibition on mining activities in areas close to watersheds via a referendum held on Sunday with the national elections. On September 2020, the highest court had ruled in favor of holding a referendum on large and medium-scale mining activity near water sources. In 2019 Yaku Perez, former Cuenca prefect and now presidential candidate, requested the Court make mining development subject to consulta.
Azuay province is home to several potentially lucrative gold, silver and copper projects, including the Loma Larga project operated by Canada’s INV Metals and the Rio Blanco mine, owned by a Chinese consortium consisting of Junefield Mineral Resources Limited and Hunan Gold Group. In 2011, 90% of indigenous and mestizo peoples of the rural parishes of Victoria del Portete and Tarqui called for a consulta on the implementation of the Quimsacocha project, located in the Andean paramos.
2020-09-28 Legal victories in Ecuador
9 February 2021
QUITO – Voters in the Ecuadorean city of Cuenca backed a prohibition on mining activities in areas close to watersheds via a referendum held on Sunday, the mayor said on Monday, in a move that may spook foreign investment sought by the South American nation.
The proposal, which was on the ballot for some 435 000 Cuenca residents during Sunday's presidential and legislative elections, asked if the city should block mining in areas near the rivers that cross through Cuenca.
"We share good news with citizens: in Cuenca, the water won," mayor Pedro Palacios wrote on Twitter. "Thank you for joining this proposal, which motivates us to continue working to care for nature."
The mayor later told reporters that the announcement was based on preliminary results, estimating that more than 80% of voters supported the initiative.
The National Electoral Council in the province of Azuay said in a statement that it had reviewed 44.5% of votes in the referendum as of early Monday morning, without elaborating.
Election authorities may be tied up for several days as they continue tallying up presidential and legislative votes.
City residents were asked five questions regarding the prohibition of large-scale metals mining in the area of the Tarqui, Yanuncay, Machangara, Tomebamba rivers, and prohibition of medium scale mining near the Norcay River.
Ecuador's Constitutional Court approved the referendum last year, but noted that it would only affect future projects.
Industry leaders understand that to mean that it will not affect key projects such as Rio Blanco, led by Chinese consortium Ecuagoldmining, and Loma Larga, being developed by Canada's INV Metals Inc.
February 4, 2021
Ecuador’s fledgling mining industry faces another test on Sunday when voters in the third-largest city will decide whether to ban major projects within municipal limits.
Alongside the country’s presidential and legislative elections, residents of Cuenca in the southern Andes mountains will be asked if they want large-scale mining within the drainage basins of five rivers. While there are no big mines operating in the area yet, the referendum threatens to derail more than 40 concessions seeking to tap gold, silver and copper reserves.
Ecuador became a burgeoning copper and gold hot spot, with prospectors and developers including BHP Group and Newcrest Mining Ltd. flooding into a country that’s looking to reduce its dependence on oil. But volatile policies and politics and often tense community relations have inhibited investments.
In a nationwide referendum three years ago, voters blocked mining in protected and urban areas. While the government hoped that would provide legal certainty for projects in general, mining opponents including Cuenca Mayor Pedro Palacios latched onto the limits on urban mining development to push for a local ban in some rural areas as well.
“Mining can be done elsewhere,” not in areas where it can affect community water supplies, said Ana Cecilia Salazar at Cabildo por el Agua, an NGO supporting the ban.
Last year, mining in Ecuador generated $810 million in exports, $430 million in taxes and $374 million in foreign direct investment. The Energy and Resources ministry didn’t respond to a request for comment on the Cuenca plebiscite.
Salazar said she expects about 80% of voters to reject large-scale mining around Cuenca, similar to the 87% in a 2019 referendum in nearby Giron. While restrictions wouldn’t be applied to small-scale and artisanal mining, she said the idea is to continue working toward a complete ban.
The wording in Sunday’s ballot took into account Ecuador’s Constitutional Court, which had previously refused to grant referendums with more vaguely phrased questions. The court has said existing projects couldn’t be retroactively scrapped.
One of the two major investments within Cuenca’s limits is Chinese-owned Junefield’s Rio Blanco. The gold project has sued for arbitration after protesters set fire to its mining camp and Cuenca courts ruled it failed to adequately consult indigenous residents.
The other is INV Metal Inc.’s Loma Larga gold project, with a planned investment of $432 million and a start date of 2023. To continue to develop the mine “is a right that emanates from the Constitutional Court, the highest court of the land,” said INV’s Ecuador General Manager Jorge Barreno. “We all have the obligation to protect the water,” and the company is working with the water authority and universities to safeguard it, he said.
Among another 44 projects in the pipeline, Southern Copper Corp.’s Ruta del Cobre is the most advanced. Representatives of Rio Blanco and Ruta del Cobre declined to comment.
The ban could stop Loma Larga from going ahead because it still requires government approvals, Salazar said. That’s debatable given the court’s track-record of trying to strengthen legal security, said Xavier Andrade, a lawyer specializing in the mining industry.
“Who will carry out exploration if you won’t be able to recover the investment?” he said. “This will all end up in another legal battle before the Constitutional Court.”
Still, the referendum’s outcome could weigh on companies’ interest in investing in Ecuadorian mining.