Ecuador to approve Mirador copper mine expansion by August
The Mirador copper mine is located in the Amazonian province of Zamora-Chinchipe, southern Ecuador. (Image courtesy of EcuaCorriente.)Ecuador is in the final steps of approving an expansion for the Mirador copper mine, run by the local unit of Chinese consortium CRCC-Tongguan, EcuaCorriente, BNamericas has reported.
Diego Ocampo, vice minister of mines, told BNamericas his office was finishing reviewing the project’s documentation, adding he hoped to be signing off on the expansion in about for weeks or by August at the latest.
The authority noted the finance ministry’s fiscal sustainability opinion is pending, but no issues were expected. “The importance of the Mirador expansion is very clear,” Ocampo said.
Mirador, in the southeastern Zamora-Chinchipe province, has estimated proven and probable reserves totalling 3.2 million tonnes of copper and is one of the only two operating mines in Ecuador. The other one is Lundin Gold’s (TSX: LUG) Fruta del Norte gold mine.
The extension (also dubbed Phase II), seeks to boost ore production at the Mirador I (South) deposit from 60,000 tonnes per day (20 million tonnes per year) to 80,000 tonnes per day (26.2 million tonnes annually). The Mirador North deposit will also be developed at a cost of $653 million, and expected output of 60,000 tonnes per day.
After the extension, the company anticipates the total production scale of the Mirador Phase II project would be 140,000 tonnes per day (46.2 million tonnes annually).
Last year, EcuaCorriente completed designs for the pit, waste dump, plant, access routes, water collection dams for the pit and waste dump, sedimentation pools, and the conveyor belt.
Mining was one of Ecuador’s top sources of income last year, behind sales of oil, bananas and shrimp, bringing $3.3 billion to the state’s coffers, data from the Chamber of Mines show. The sector also accounted for 51% of foreign investment in the country in 2023.
Companies hoping to explore and mine in the Andean country used to face fierce local opposition. A new process, which include public consultation, has mitigated that risk.
Popular referendums are now a necessary step for any company to obtain a mining license in Ecuador. Without them, firms would have to wait longer than expected to have all permits in place before starting construction of a mine.
The ambitious objectives of Ecuador's state mining company
Since last September, Ecuador's state mining company Enami EP has signed three exploration agreements with private sector players.
The deals were signed with one of the largest gold producers in the world, Canada’s Barrick, Australia’s Hancock and Vancouver-based Solaris Resources. They involve total combined investments of around US$173mn in exploration on more than 100,000ha in the northern (Hancock), southern (Barrick) and eastern (Solaris) zones, over a period of eight years each.
Emmanuel Delaune, who became CEO of Enami in February, signed the agreements with Hancock and Solaris in April and May, respectively.
In this interview, BNamericas talks with Delaune about the exploration agreements as well as the medium and long-term plans he has for Enami.
BNamericas: How are the commercial agreements signed by Enami with three private companies progressing?
The agreement with [Hancock subsidiary] Hanrine is the only one that already has the areas mapped, and it's the one we’re making progress on.
The initial exploration phase is four years and four more years of advanced exploration.
The agreements with Barrick and Solaris are framework agreements, that is, they give us the basis from which specific agreements will emerge for each of the concessions.
BNamericas: If companies find significant deposits, what happens to them?
Delaune: The regulations establish that in the event that deposits of interest are found, companies can request the assignment and transfer, exclusively within the advanced exploration period, but there must be an assessment of the deposit. That is, if they comply with the regulations, the concessions could pass into their hands.
BNamericas: Around US$173mn of investment committed by the three companies in eight years isn't a significant amount.
Delaune: In the case of Barrick and Solaris they're new, free areas, so there isn't much information. Committing to a higher investment just because you have some evidence would be very risky.
In the case of Hanrine, the areas are around Llurimagua, where there is already historical information and strong indications of the presence of minerals, basically copper.
The planned investments are minimal amounts, but if large deposits are found they will be higher. Everything will depend on what they find.
It may be the case that a company wants to do an intense drilling phase and if it finds something worthwhile it will make the necessary investment.
BNamericas: In the past there have been cases of companies that haven't complied with the committed investment. How is compliance now guaranteed?
Delaune: The contracts establish that if, after exploration, it is determined that the committed investment was not met, the company will have to pay the difference to Enami.
BNamericas: What are the main actions planned to strengthen Enami?
Delaune: Our big objective is to return to the role of being the executing arm of public mining policy, developing mining because we're aware that it brings development and progress to the areas of influence, which we can see around the Fruta del Norte and Mirador mines [the only large-scale mines in the country].
The economic factor is a great limitation to carry out exploration or mining, which is why we seek to strengthen commercial agreements so that companies that have financial muscle and technical experience work with us to carry out exploration in certain areas, in which Enami retains its ownership.
We also want to strengthen other types of associated projects, especially focused on small mining. Additionally, we’re seeking to reorganize the portfolio of projects we have and the construction of a processing plant.
BNamericas: How many projects are there in the portfolio?
Delaune: We have 13 projects and 24 concessions. Three projects are limestone: Unacota in Cotopaxi, La Tronera in Chimborazo and Isimanchi in Zamora Chinchipe.
Additionally, we have the Tola Norte iron ore project in Esmeraldas. The other projects are polymetallic, gold, silver and copper, the main ones being in the provinces of Imbabura, Zamora Chinchipe and Azuay.
We also have three projects in the north: Río Magdalena, Playa Rica and Espejo, for which we have an agreement with Cornerstone, which was acquired by SolGold.
We’re holding working groups with SolGold to resolve some legal issues.
BNamericas: Have any of the projects been affected by illegal mining in the provinces of Imbabura, Zamora and Azuay?
Delaune: No. In Imbabura, for example, we have the Llurimagua project, and the areas around it were the subject of the commercial agreement that we signed with Hanrine and in those areas no illegal mining has been detected.
In the case of Zamora Chinchipe, as a result of the increase in the price of gold, illegal activity reached the Cumbarantza industrial estate. Illegal activity has also been detected in Azuay. We've filed the appropriate complaints with the regulation and control agency and with the prosecutor's office.
BNamericas: The mining cadastre is still closed. Why in recent days did the energy minister authorize Enami to request new concessions?
Delaune: Under regulations, Enami has a preferential right. Minister Roberto Luque ordered the regulation and control agency to make this preferential right viable with respect to the mapping, processing, granting and subsequent registration of new mining concessions in its favor.
The criticisms that have been raised are unfounded since the constitution establishes that non-renewable natural resources are the property of the State and can, in exceptional cases, be delegated to the private sector. We're a public company, there is no exceptional delegation. Being a public company, we're part of the State and, therefore, we're also owners of those resources.
The temporary closure of the mining cadastre was never going to affect Enami, since it has the preferential and first option rights to request areas in free zones.
BNamericas: Why is a gold processing plant owned by Enami justified?
Delaune: There are two fundamental reasons for having one's own processing plant: for the processing of minerals seized from illegal activities, and to cover the production of small-scale and artisanal mining.
At the moment, Enami has to choose, through a public tender, a private company to provide us with the processing service, which is difficult for the State, so it would be ideal to have its own plant that generates greater recovery, greater resources for the State and a tailings deposit service could also be provided.
At the moment, most of the small mining processing plants don't have a tailings deposit and everything is put in a communal deposit, located in El Oro province, which is why environmental problems are being seen.
Just like Enami in Chile does, we seek to treat the production from small-scale mining and also market it, so in addition to generating resources for the State, we fight illegal mining, which implies not only illicit extraction but also illicit processing and commercialization.
The idea is to break this vicious circle, with a processing plant, formalizing and training artisanal and small-scale miners, and working hand in hand with organizations such as the United Nations Development Programme, through its Gold+ program [an initiative to prevent the release of mercury from mining operations].
BNamericas: If Enami has practically no resources, where will the funds come from to build the plant and what is the estimated cost?
Delaune: This is a medium-term project. The best option would be a strategic partnership, to launch a tender and have a private party finance the construction, operate it and, after a certain time, return it to the State.
We're very conservative in projections. We're thinking of a plant that processes 100t/d, whose cost would be around US$3mn, to which we must add US$25-30mn for the tailings deposit, because being a public company not only are we seeking economic profitability, but also environmental and social profitability.
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