Exclusive: Chinese consortium Ecuagoldmining opens dispute with Ecuador over halted mine

By Alexandra Valencia

QUITO (Reuters) – Chinese mining consortium Ecuagoldmining has initiated a dispute with Ecuador’s government over a gold mining project that has been halted by objections from community activists, a move that could lead to a $480 million arbitration fight, an Ecuadorean official said in an interview on Tuesday.

Ecuagoldmining’s Rio Blanco mine in southern Ecuador had barely kicked off production in 2018 when the activists, mostly comprising local farmers, demanded they be consulted on whether the mine should be allowed, and won a court order halting operations.

Deputy Mining Minister Enrique Gallegos-Anda said it was the first such dispute since Ecuador began a broad push to expand its mining sector, which has drawn investor interest but also faces concerns about the power of local groups to halt projects.

“The international dispute was presented in January,” Gallegos-Anda told Reuters. “The ministry needs to officially receive the invitation for talks. We are going to have a dialogue and will seek a solution.”

The six-month process is the first step in a potential arbitration as laid out in an investment treaty between Ecuador and China, Gallegos-Anda said.

He added that Ecuador’s government hopes that a constitutional court ruling would allow the project to resume operations, avoiding an arbitration proceeding.

“The logical thing to do is wait for the magistrates of the court to conclude that the judges incorrectly interpreted the norms,” said Gallegos-Anda. “Shortly thereafter, the company could resume activities.”

If it does go to arbitration, the Ecuagoldmining will seek the full value of the gold that it expected to produce during the 11-year concession, he said, adding that he did not know which arbitration panel would hear the dispute.

Ecuagoldmining, a consortium made up of Chinese firms Junefield Mineral Resources Limited and Hunan Gold Group, declined to comment.

Community opposition to oil and mining projects has become a growing issue in Latin America, with local organizations in Peru and Colombia frequently demanding greater environmental protection and more jobs for those who live in the region.

Ecuador’s constitutional court last year ruled against requests for popular referendums on mining projects involving Australia’s SolGold PLC and Canada’s INV Metals Inc.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.