Ecuador: Mega-Mining Takes Off


By Luis Ángel Saavedra

On March 5, Ecuadoran President Rafael Correa signed a large-scale mining contract — the first of this type in the country — with Chinese company Ecuacorrientes, or ECSA. The next day, environmentalist organizations staged a series of protests. They announced they would block the execution of the contract, stating that it does not include the environmental permits that would have laid out a plan to avoid environmental damage to the area, and how to take care of any damage that did occur.

From the beginning of his first term in 2007, Correa announced his plan to move forward with large-scale mining projects. The plans were delayed, however, due to a decision by the Constituent Assembly in 2008 to rescind mining concessions through the Mining Mandate, which also restricted mega-mining projects.

Despite the mandate, Correa continued negotiating with ECSA the concession for the Mirador project, located in the Cordillera del Cóndor, in the Amazonian province of Zamora Chinchipe on the border with Peru. Likewise, negotiations went on with Canadian firms Kinross Gold Corporation, with the Fruta del Norte Project on the northern side of the same mountain range, and IAMGOLD, with the Kinsacocha project in the province of Azuay in the southern mountains.

Correa planned to sign the contract with ECSA at the end of March, but surprisingly decided to do it on March 5, preempting a national march in defense of water organized by the Confederation of Indigenous Nationalities of Ecuador, or CONAIE, that was to take place three days later. The rush to sign the contract meant Correa dismissed the 17 observations made by the Comptroller General, such as Article 6 of the Mining Mandate that establishes a procedure for concessions given on protected natural areas, protective forests and those that affect headsprings and water sources.

The Environment Ministry’s permits would spell this out after analyzing the Environmental Management Plan presented by the mining company, which is mandatory before signing a contract.

In this case, however, that doesn’t exist.

The president admitted during the contract signing that mining contaminates the environment: “All mines pollute. We need mining. Let’s have responsible mining”, he said, without mentioning the environmental permit.

With this contract, ECSA has access to 5 billion pounds of copper reserves, will process 60,000 metric tons per day, and invest US$1.4 billion in the first five years. In return, the state will receive 52 percent of earnings, which includes the 12 percent value-added tax (VAT), income tax, profits and royalties. ECSA will hand over $100 million in advanced royalties.

Correa then announced that in April he would sign contracts with Kinross and IAMGOLD.

Reactions and repression

The contract signed with ECSA triggered immediate reactions from National Assembly members and environmentalist groups.

Kléver Jiménez, a legislator from Zamora Chinchipe, questioned the contract on the grounds that it violates Article 405 of the Constitution, which states that no foreign company can maintain concessions in areas important to national security, like borders — in this case with Peru in the Cordillera del Cóndor.

Jiménez added that it is untrue Ecuador will receive 52 percent of earnings from the Mirador project.

“There is talk of turning over the 12 percent VAT, but this is a value-added tax and the company will not produce any added value, because everything taken will be raw [materials]”, the assemblyman said.

Indeed, the 12 percent tax is on domestic purchases of manufactured goods and ECSA will not buy a lot of domestic goods. The bulk of their investment will be in international purchases, which do not charge VAT and therefore will not generate revenue to the state.

According to the Ecuadoran Constitution, all resource extraction projects should generate a higher profit for the state than for the company; in this case, without the VAT, the state will not receive 52 percent.

On March 6, environmental groups gathered at the Chinese Embassy in Quito to submit a letter of refusal of the ECSA contract, and to make the Chinese government aware the project has no environmental permit and has not taken into account the comments of the Comptroller General, which would be grounds for voiding the contract.

To this end, members of the Amazonian Environmental Lawyers Network, or RAMA, have begun studying the contract to file an action for nullity in national courts.

“What we want is for the Chinese government to recognize the irregularities that their companies commit in the countries where they mine, and for them to know there is opposition to Ecuacorrientes’s presence in the country”, said Gloria Chicaiza of the Anti-mining Collective, a grouping of diverse social organizations.

The national government set up a violent operation to remove eight women who had entered the Chinese Embassy and, through the Attorney General, wanted to prosecute them for “trespassing”, although Chinese diplomats asserted they did not want to press charges.

The women’s cases were dropped for lack of legal grounds. Moreover, two of those arrested are also close family members of government higher-ups: one is the niece of the Minister Coordinator of Policy, Doris Soliz, and the other is the niece of the undersecretary of the Ministry of the Interior, Oscar Bonilla.

“We are going to flood Quito”

Since January, CONAIE and other social movements that oppose mega-mining began organizing the “March for water, life, and the people’s dignity”, which began in the canton of El Pangui in Zamora Chinchipe, and will arrive in Quito March 22, on World Water Day. CONAIE estimates about 5,000 participants will be in the capital that day.

“The dignity march that [began] March 8, is the march of the oppressed, [it] is a march in defense of life, to defend water, to protect our resources [that have] again been handed over to multinational [corporations]. Correa’s hostility to it reveals he is aligned with the side of the oppressors”, said Salvador Quishpe, provincial governor of Zamora Chinchipe and the head of this newest indigenous march.

The march began as planned, and four days later 2,000 protestors participated as it arrived in Cuenca, in the province of Azuay — the third province along the way.

The government has responded with a propaganda campaign suggesting the protestors want to overthrow the administration, and convoked similar numbers of its own supporters to convene when the march arrives in each provincial capital.

“We are not coup leaders, we do not want to overthrow the government, but we’re going to flood Quito with people who do not want our water polluted”, says Quishpe.

Correa said the groups organized by the government are in honor of World Water Day and will happen throughout the month of March. Given the coincidence of the overlapping dates and locations for the government’s rallies and the march, CONAIE President Humberto Cholango appealed to the government to avoid confrontations in the streets.

“We will not provoke violence, so the government will be responsible if there are clashes,” Cholango said.

Latinamerica Press

Latinamerica Press is a product of Comunicaciones Aliadas, a non-profit, non-governmental organization based in Lima, Peru, specializing in the production of information and analysis about events across Latin America and the Caribbean with a focus on rights, while strengthening the communications skills of local social leaders.

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