Construction of the Cascabel mine in Ecuador is seen starting in 2025. Credit: SolGold
Ecuador has indicated that it will consider delaying the implementation of a new mining fee estimated to generate $229 million annually, according to Rodrigo Darquea, vice president of the country’s mining chamber.
Darquea said he attended a meeting with Deputy Mining Minister Javier Subia on Thursday, in which officials asked the industry to request in writing that the charge be suspended while it’s discussed further. That decision still has to be formalized. The ministry didn’t respond to requests for comment.
“We expect a favorable reply to be able to talk with a suspended fee, which would reduce the stress and discomfort currently affecting investors, many of which have seen that they cannot continue in the country if it goes into effect,” Darquea said in a telephone interview.
Weekly talks between authorities, including the finance ministry, and industry representatives are expected to last a month. “We need legal security, we need clear rules,” Darquea said. “There is a lot of work to be done.”
The two sides need to “come up with something that makes sense,” Dan Vujcic, chief executive officer of Ecuador-focused Solgold Plc, said by telephone from Sydney. “Governments everywhere do things like this. The key thing is just education on how capital markets work.”
The fee was announced earlier this month as part of efforts to bolster oversight amid a surge in illegal mining and reduce deficits as President Daniel Noboa looks to comply with an International Monetary Fund agreement.
The measure — which would see mining regulator ARCOM’s budget this year jump 20-fold to $115 million — caught the industry off guard after the reelection of the market-friendly Noboa. In the meeting, company representatives argued that the fee would make Ecuador too expensive for exploration companies that lack cashflow.
Aurania Resources Ltd. estimates the fee would represent about 10 times the amount the Toronto-based company pays for its annual concession fees in Ecuador, according to a June 11 statement.
(By Stephan Kueffner)