Ecuador court puts nail in $3bn copper project’s coffin

Ecuador’s constitutional court has decided not to process appeals aimed at resuming activities at the disputed $3 billion Llurimagua copper-molybdenum project, in the country’s northern Imbabura province.

The 982-million-tonne copper asset, about 80 km northeast of Ecuador’s capital of Quito, was initially being advanced by the country’s national mining company, Enami EP, with the help of Chile’s Codelco.

Tensions between the two miners began brewing shortly after Ecuador passed a reform to its mining law in 2020 that threatened Codelco’s right to about 42,600 hectares of exploration ground.

Cooperation between the two state-run companies came to a halt in 2021, with Codelco taking Enami EP to an international arbitration court. The world’s largest copper producer claimed its partner had failed to fulfill its part of the development agreement.

The two nations resumed talks over their partnership in Llurimagua in 2022, but other than Codelco dropping the lawsuit against Enami, no further details of the agreement have been disclosed to date.

Still possible

This week’s ruling, Ecuadorian paper El Universo reported, means that a March 2023 decision by Imbabura province’s supreme court to suspend Codelco’s environmental license for Llurimagua, stands.

As part of the ruling, Enami EP will have to resume consultation on the project and prepare a new environmental impact study and environmental management plan for the advanced exploration phase project.

Ecuador is rich in minerals and metals, but its mining industry is relatively new and lags behind that of neighbouring countries like Chile and Peru. This is partly due to court decisions and opposition from indigenous communities to mining projects.

The administration of current President Daniel Noboa is seeking to promote greater mining activity as a means of economic development, despite the legal and community-based challenges that have hindered progress in the sector over the past decade.