Focus: Strife with indigenous groups could derail Ecuador's drive to be a mining power

Solaris Resources

10/12/2020 13:45

By Alexandra Valencia and Brian Ellsworth
    QUITO, Dec 10 (Reuters) - Conflicts with indigenous
communities have stalled operations at Ecuador's San Carlos
Panantza copper mining project, which the government of
President Lenin Moreno had long pointed to as an example of
mining sector expansion that would generate $40 billion in
export revenue over the next decade. 
    Many now view the $3 billion project bankrolled by China's
ExplorCobres S.A. as emblematic of the turmoil impeding
Ecuador's push to become an Andean mining power to rival Peru
and Chile.
    The project had been slated to start exporting copper this
year, but a dispute with the Shuar indigenous community led
ExplorCobres to halt the project nearly two years ago, according
to the country's mining authority, which says the company does
not believe conditions on the ground are suitable to resume
work.
    Unknown assailants in March set fire to mine installations
and stole equipment.
    In a series of complaints, indigenous groups say the
government did not adequately consult them about projects. The
strife is undermining Ecuador's ambitious plans to develop
large-scale mining as an alternative to its oil industry.
    "There is not a consensus on what role mining should play in
the development of economy, and communities often feel like
they've been run over," said Sergio Guzman, Andean region
director for consultancy group Colombia Risk Analysis.
    "A conciliation is needed between the (government's) mining
objectives, and how this results in (benefits) for the
communities."
    
    AMPLE DEPOSITS
    Of the five projects with $7 billion in investment that form
the backbone of the mining effort, two - including San Carlos
Panantza - have completely halted. A third is relocating some
facilities due to local opposition.
    Other projects that are less advanced face pushback from
local leaders still unconvinced their communities will benefit
from an industry plagued by worries about environmental damage
and limited job creation.
    On Wednesday, Ecuador's electoral court approved a
referendum to be held in February that will ask voters if they
want to outlaw mining near rivers that run through the city of
Cuenca. The results would be binding but not retroactive.
    Mining industry leaders complain that such referendums
change the goal posts on projects that were developed under a
different set of guidelines from Ecuador's government.
    The resistance could undermine Ecuador's efforts to generate
tax revenue to ensure a return to economic growth and bolster
state finances after an IMF-backed debt restructuring plan this
year.
    Ecuador lags Chile and Peru in mining development despite
having what are believed to be ample deposits of copper and
gold. It has not completed enough exploration to determine total
mineral reserves, according to the government.
    The industry will generate about $4 billion in tax revenue
and some $40 billion in export earnings over the next decade,
according to the government's most conservative estimates.
    Mining Deputy Minister Cesar Vasquez told Reuters in a
recent interview that Ecuador is prepared to adjust timeframes
so concessions do not expire due to social conflicts. Still, he
acknowledged that community resistance was dampening investor
enthusiasm.
    "There are people who are opposed to mining activity and
they are going to (oppose it) with or without the law," he said.
"The state will always act within the law to defend the
interests of the country."
    
    STANDOFF
    Ecuador's mining effort can boast some success stories. 
    The Fruta del Norte gold mine led by Canada's Lundin Gold
Inc  LUG.TO  is already exporting. The same is true of the
Mirador copper mine owned by a subsidiary of Chinese consortium
CRCC-Tongguan Investment, the ultimate parent of ExplorCobres.
    Canada's Solaris Resources  SLS.V , in charge of the
now-exploratory Warintza copper-molybdenum project, created a
strategic alliance with two communities of the Shuar people in
September after three years of dialogue.
    But community opposition has taken its toll - particularly
at San Carlos Panantza, which has never been on good terms with
the local community.
    "The government approved concessions years ago without
providing information and without the knowledge of the
Shuar-Arutam people," said Josefina Tunki, president of the
Shuar-Arutam. "The people have said 'no' to having this
large-scale extractivist company in our territory."
    Indigenous activists said the mine's first camp in 2016
displaced eight families and eliminated the ancestral village of
Nankints, triggering a standoff with the Shuar people that year
that left one police officer dead and five wounded.
    Then-president Rafael Correa described them as a "minuscule
group of extremists," denying the area was ancestral territory
and ordering a military occupation.
    ExplorCobres did not reply to a request for comment.
    In March, it issued a statement condemning the attack on the
project, calling them "delinquent acts by armed groups that came
from outside the zones of influence of the project."    
    Moreno, elected in 2017, hoped to turn the page on the
incident. But by 2018, the mining authority had agreed to
indefinitely extend the time frame during which ExplorCobres
could carry out exploration, citing social conflict.
    The Shuar people filed a lawsuit to have the entire project
scrapped and demanded damage payments from ExplorCobres for the
forced displacement of its people, but the case was thrown out
by a provincial court in 2019. 
    The Shuar are now taking the fight beyond Ecuador's borders,
saying in November they will file a complaint with the
International Labor Organization against Ecuador. The complaint
will argue that granting the mine concessions without the
group's permissions violates ILO statutes on the rights of
indigenous peoples. 
    Though an ILO decision alone would not alter the course of
the mine, a negative recommendation would pressure authorities
by staining Ecuador's reputation in the diplomatic community.
    The office of Ecuador's attorney general, which represents
the country in international legal disputes, said it had not
been informed about the complaint.
    "We will never allow extractivist companies into our
territory, we want to live in a territory without pollution,"
said Tunki at a press conference.

 (Additional reporting by Stephanie Nebehay in Geneva; Editing
by Christian Plumb and David Gregorio)
 ((brian.ellsworth@thomsonreuters.com; 58 212 655 2660; Reuters
Messaging: brian.ellsworth.thomsonreuters.com@reuters.net,
@ReutersVzla))