MINERGIA Magazine – LEGAL MINING, http://www.minergiaec.com/ There are no talks regarding the stoppage of mining exploitation experienced in the country in recent years. After the promulgation of Constitutional Mandate No. 6 – known as the Mining Mandate –

We are very pleased to share the report “MINING 2018 Guide (Ecuador)” prepared by our firm TOBAR ZVS and published by the prestigious firm Chambers & Partners.

Should you require any further information, please do not hesitate to contact us at:  REI@TZVS.EC

To read complete guide, please Download Related Material

Effective April 13, 2018, the Organic Code of Environment (OCE) will come into force.   This Code  regulates the administrative–environmental matters, and guarantees: i) the right of people to a healthy and balanced environment; and, ii) the rights of Nature.

Following is a summary of the OCE’s effects:

1. In environmental matters: public and private decisions shall incorporate the environmental  principles established in the OCE: comprehensive responsibility, best available technology, sustainable development, the polluter-pays, in dubio pro natura, access to information and participation, caution, prevention and subsidiarity.

2. The OCE incorporates regulations to protect the animals’ well being, including obligations, responsibilities and bans about treatment of animals.

3. The government shall collaterally act in environmental damages in the following cases:

• Unrepaired environmental damages;
• In the absence of identified executors;
• The executors had breached the remediation plan;
• Due to the magnitude of the environmental damage, it cannot be expected the remediation by the executor; or,
• Risk of new damages that the executor is not able to assume.

4. The environmental impact has been classified as follows:

• Non-significant impact: No permit is required, just good practices.
• Minor impact: environmental management plan is required.
• Medium impact: environmental impact assessment is required.
• High impact: environmental impact assessment is required.

5. The government is obligated to make prior consultations to people directly affected by the development of projects. However, the Environmental Authority has the final decision regarding the execution of the activities. For this reason, this consultation is not binding.

6. The government will grant environmental incentives (economic, tax or honorary awards) for subjects that comply with regulations and improve the environment. The Environmental Authority will evaluate and grant such incentives.

7. The executor of the activity is fully responsible for environmental damages. The OCE included further standards to determine responsibilities for environmental damages as follows:

• In case of entities belonging to corporate groups, the responsibility may reach to the company that makes the decisions.
• The responsibility may reach to the person in charge of the control of the activity and the managers during his/her administration.
• In case of several causers, the responsibility will be joint and several.
• In case of death of an individual, the pending liabilities shall be borne by the heirs.
• In case of extinction of the entity, either the partners or the shareholders shall be responsible for the environmental damages in accordance with the regulations.

8. The executors of the activity are obligated to notify the respective authority within 24 hours of the occurrence of environmental damages, and they shall implement the following actions, without delay:

• Pollution contingency, mitigation and correction;
• Environmental remediation and restoring;
• Compensation and indemnification to affected people; and,
• Monitoring and evaluation.

9. The government shall establish sanctions in accordance with the magnitude of the environmental damage. These sanctions may involve several actions to achieve integral reparation.

10. Sanctions may include economic penalties, forfeitures, destruction of goods, suspension of activities, termination of permits, loss of incentives and evictions.

On June 28, 2018, Minister of Mines, Carlos Pérez, signed the Ministerial Decree Nro. 2018-0034 (Decree 34) which will allow mining concessionaries to perform scout drilling during the initial exploration phase of mining concessions in Ecuador.

Up until now, drilling activities were only permitted during the advanced exploration phase of mining concessions. Undoubtedly, this situation affects the initial exploration activities that according to the Mining Law must be performed during 4 year since a mining title is granted.

According to Decree 34, test or reconnaissance boreholes can be drilled in a maximum of forty (40) platforms within each mining concession. Exceptionally, in areas that intersect with highly sensitive ecosystems legally declared by the Ministry of the Environment, test or reconnaissance boreholes can be drilled in a maximum of twenty (20) platforms within each mining concession.

Test or reconnaissance boreholes are understood as exploratory wells drilled at various angles and depths, using human portable or air transportable rigs. The platforms must be of maximum  10 meters per side and use efficient water systems and biodegradable drilling fluids.

As far as we know, the Ministry of the Environment has not declared any mining area as an “area with a highly sensitive ecosystem,” and therefore the limit of twenty (20) platforms does not currently apply.

With these new regulations, in order to perform scout drilling, no new standards or additional regulations are required. Nevertheless, considering that the mining concessionaire will use water for this purpose, it must obtain an authorization for industrial use of water at the National Water Secretariat (SENAGUA). In some cases, it also would be necessary to get a registration of hazardous waste and a forestry feasibility certificate (if the areas are within protected forests).

Certainly, we believe that allowing scout drilling within initial exploration is great news for the Ecuadorian mining industry and especially for investments within the concessions granted through the tender processes that started in 2016. When the process started, many companies committed to make investments with the understanding that permits and authorizations would be granted in a timely manner. Regretfully, this did not occur and investments have slowed due to the delay on issuing licenses and permits specifically from the Environmental Ministry and the National Water Secretariat.

We are confident that the possibility of carrying out scout drilling during initial exploration activities should restart the flow of investments. For Ecuador and the companies it is a win-win situation.