October 27, 2020

Mining, a more than disputed option to revive the economy in Ecuador



In the midst of a pressing lack of liquidity, Ecuador believes that mining is its lifeline to inject quick money into public coffers, despite the opposition of environmentalists and indigenous people who see it as yet another calamity against the environment that is also dragging a high “social” price.

The Ecuadorian Minister of Energy and Non-Renewable Natural Resources, René Ortiz, sees this new sector of exploitation of the country as one of the main sources of foreign exchange to take advantage of, particularly now that the price of oil is in decline in the context of the crisis. of the coronavirus.

BETTER THAN OIL?

“Mining is Ecuador’s new export icon and we are all doing our best to position it in the world,” said the minister, who also recalled that having a dollarized economy “export earnings and foreign direct investment are essential “

Ortiz spoke in a debate on the future of mining, in which the representatives of the multinationals assured that the positive effect of mining is much greater than in the oil industry.

“Only the construction of the SolGold mine in the Alpala project is expected to generate around 3,500 direct jobs,” says a bulletin from the organizers of the virtual forum “The role of mining in the economic revival of Ecuador,” organized by The Business Year.

Nick Mather, of that Australian company that operates the “Cascabel” project, in the province of Imbabura, insisted that these projects generate “more employment” than oil, which Ecuador has exploited for half a century and from which it has developed an unbearable dependence.

Ecuador, which produces around 534,000 barrels per day, calculated for 2020 a price slightly above 50 dollars a barrel, and the estimate that it will be less than half, suffocates its finances.

While Lundin Gold, the concessionaire of the “Fruta del Norte” project, in the Amazon province of Zamora Chinchipe, recently recalled its annual contribution of 1.9 million to the Yantzaza canton as part of the project’s social revenues.

A NEW INDUSTRY

Ecuador started industrial mining with the inauguration in 2019 of the “Mirador” project, in Zamora Chinchipe, although it already has others of gold, silver or copper in the provinces of Azuay, Imbabura, Morona Santiago, Cotopaxi, El Oro and Bolívar.

In the first quarter of the year, the exploitation of mines and quarries, as well as the manufacture of other non-metallic mineral products, accounted for $ 99.22 million in tax revenue.

In 2019, mining contributed 1.64% to GDP and the forecast for 2020 is that it will reach 1.93%, according to the Central Bank (ECB).

The original intention of the Lenin Moreno Government was 4% at the end of his term in 2021, a goal that is almost unattainable by now.

But neither these state revenues when the country faces a debt of some 60,000 million dollars, nor the local contributions to the communities, convince the ecological and indigenous groups of the supposed bonanzas of mining.

MINING IN THE MIDDLE OF THE PANDEMIC

Ivone Ramos, representative of Acción Ecológica, told Efe that these projects are located in areas of high biodiversity and that this “could cause the destruction of ecosystems and that many species disappear.”

Ecuador is one of the most mega-diverse countries in the world, and extractivism also threatens the water sources of the communities that live around it, mainly indigenous.

In early April, the rupture of a pipeline in the seismic zone of the Amazon polluted dozens of kilometers of the river, affecting almost one hundred thousand people.

In addition, international and local activists assure that these works have been an outbreak of COVID-19 infections among nationalities and indigenous peoples, some of only a few hundred members.

The circulation of miners in the midst of the health emergency from various provinces, Ramos warned, is “irresponsible on the part of the State”, and even more so that “it is planning the massive launch of mining activity as a solution to the economic problem.”

THE SOCIAL PRICE

More energetic is the president of the Confederation of Indigenous Nationalities of Ecuador (Conaie), Jaime Vargas, for whom contracts with multinationals “do not meet the parameters of the concession”, such as “prior consultation and socialization with the communities”.

“The big beneficiaries are the companies, not the people,” said Vargas, who assures that “neither oil nor mining are going to save us from this pandemic.”

The coronavirus found Ecuador in a very weakened financial situation due to the debt carried by the previous Government, and the direct expenses of the pandemic and the almost complete economic paralysis since March 16 (Ecuador will lose around 6.3% of GDP, according to the IMF) have led the country to ask for more credit to overcome what would otherwise be bankruptcy.

Mining is therefore conceived as a quick way of injecting liquidity through the advance payment of exploitation rights, although for indigenous communities it is too high a price: environmental and social.

The effects produced in the community where the “Mirador” project is located are of “social decomposition and division of communities by the gifts of mining companies,” recalled Andrés Tapia, representative of the Confederation of Indigenous Nationalities of the Ecuadorian Amazon (Confeniae ).

Kevin Hidalgo

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