How does Lucky Minerals' operation in the Fortuna Project fit into Ecuador's mining awakening?
Lucky Minerals has a 550-sqkm project called Fortuna in Ecuador located in the south of Azuay, Morona Santiago and Zamora Chinchipe provinces. It is a project of 12 contiguous mining concessions awarded at the end of 2016. Lucky Minerals has a great track record in the mining sector and is listed on the Toronto Stock Exchange. We see huge potential in Ecuador to develop its mining industry. The geology of the country is attractive, and most of it has yet to be explored. Our Fortuna project was born out of historic information that is being reinterpreted. It is still at an early stage, though we have found areas with certain geological anomalies that indicate it is likely to find copper.
What are your thoughts on the government's efforts to attract foreign investment into the mining sector?
The biggest attractiveness of the country is its geological potential; only 7.5% of it has been explored for mining purposes. However, this has to be coupled with a favorable administrative and legal environment. The steps the government has taken to attract FDI have been extremely important for the mining industry. However, there is still a great deal to do to turn Ecuador into a dynamic mining market at the level of neighboring countries such as Colombia, Peru, or Chile. A fundamental step was the concession of 275 areas between 2016 and 2017 for new companies to enter the market. This led international players in the industry to come to Ecuador to bet on a promising business hand-in-hand with the government. The “Mandato Minero" was a moratorium on mining projects in 2008 and was waived in 2016. Since then, mining has been one of the leading contributors to FDI in Ecuador.
What impact does the mining sector have on the country's economy and its society?
Thus far, large-scale mining has not truly kicked off in Ecuador, while the small-scale mining sector already accounts for 1.6% of the country's GDP. With two major projects underway, Fruta del Norte and Mirador, this percentage is expected to increase to 4%. Both started in 2019, so we have yet to see the impact on the macroeconomic level. President Lenín Moreno recently stated the country received its largest FDI inflow in 2018 since the dollarization of the economy in 1999, and the mining sector represented 53% of all the FDI that the country received over that year, surpassing the oil sector, which has traditionally been key to Ecuador's growth.
As the sector becomes more prominent, what steps are being taken to guarantee responsible practices?
The sector has recently started Alliance for Responsible Mining (AMRE), which some big companies participates in, and that also includes the most important mining association that is the Chamber of Mining. The purpose of this entity is to promote responsibility in areas like rule of law, respect for the environment and communities, safety for employees, and the overall contribution that the mining sector has on the growth of Ecuador as a country. It is in the benefit of all to have a business as socially and environmentally minded as possible. However, the lack of knowledge that Ecuadorians have in the mining sector is a challenge that has to be addressed. The country has traditionally had a small mining sector that did not follow international standards, including a certain degree of illegal mining. These factors have resulted in people thinking the mining sector is harmful to the environment. We want to show that it is possible to do mining while being responsible with the environment and responding quickly if there are any issues that need to be addressed.
How is the sector addressing the potential cancellation of projects following communities' votes in local referendums?Foreign companies are in Ecuador to conduct commercial activity to generate jobs and development. In doing so, we fulfill the regulatory framework that the country has established for mining activity, and we need all the parties involved to also respect it in order to have fair rules. Mining operators in Ecuador believe these local referendums are against the constitution and that the process that took place in Girón was flawed. As much as we want communities to be involved in projects, as per the constitution, they cannot made decisions through local referendums in matters that are considered projects of national interest for Ecuador. This would also be the case for large projects in the oil sector or energy generation through hydroelectric plants. Organizing such referendums is a wrong interpretation of the law in the eyes of the mining sector.