MINING REFERENDUM 2024

1. President Noboa has announced a referendum with several questions to improve the country’s security and economy. Along with others, there is question Nº 3, which reads as follows: Do you agree that, to eradicate illegal mining, the areas mentioned in Annex 6 should be declared territories of national interest to assess, on a one-off basis, the relevance of revoking mining concessions to guarantee the proper use of mineral resources and combat organized crime?

2. The question’s wording could be confusing; therefore, this document aims to clarify the scope of the question after reviewing Annex 6, which has been filed into the Constitutional Court for its assessment of constitutionality.

3. After reading the rationale for the question, Annex 6, it’s clear that the government is seeking an additional tool to combat illegal mining. It considers that such activity has repercussions on national security, the environment, and tax collection, among others. Apart from the problems that illegal mining activity brings, the government considers that it is “part of the chain of trafficking in arms, explosives, money laundering” and that it is a threat to national security. Annex 6 describes that authorities have found that many of these activities are carried out within existing mining concessions, and some illegal miners work with the complicity of the mining concessionaires and landowners.

4. Therefore, the question seeks for the state to revoke the concessionaires’ mining concessions that have become complicit in illegal mining following a process of investigation and sanction by the mining authorities. Annex 6 clarifies that such a process would be a “special simplified process”. The evaluation of the territories of “national interest” will be determined by the Energy and Non-Renewable Natural Resources Regulation and Control Agency (ARCERNNR), starting by declaring the following: Buenos Aires, San Lorenzo, Yutzupino, Chinapintza, etc. However, the application can be extended to any part of the territory.

5. From a legal point of view, the question ratifies the general principles already contained in the Constitution and laws of Ecuador. Under the principle of objective environmental liability, operators (concessionaires) are presumed to be responsible for damage and activities occurring within their mining concessions, and any third-party activity is presumed to have been authorized by the concessionaire unless it proves otherwise (presumption of environmental liability). The mining concessionaire could prove it did not authorize an illegal operator through a denounce or administrative relief action filed before to the mining authorities.

6. The current legislation already has a regulated process for declaring a mining concession’s caducity (revocation or extinction) due to environmental damage or illegal exploitation. However, in this case, Annex 6 clarifies that to instrument the revocation in the cases under this question, a “special simplified process” will be in place. Currently, the authority initiates an investigation process, either within territories of national interest or in any place where mining concessions exist, to determine if there have been exploitation, processing or commercialization activities. If the complaints or appeals proposed by the mining concessionaire are not provided, it will be understood that these are activities authorized by the titleholder of the mining area, and then the title will be revoked (caducity declaration). Although in the case of this particular question, a “special simplified process” will be, there are no material changes in the principles of application (due process, right of defense, the opportunity to provide evidence, etc.).

7. In sum, the consultation process in the referendum question does nothing to change what is already in the law to revoke mining concessions for illegal exploitation (caducity process). However, including the specific matter in the referendum raising the protection category of the industry to “national interest” sends a strong political message against illegal mining that benefits the legal and responsible industry.

© TobarZVS 

This publication contains information of general interest and does not constitute legal opinion on specific issues. Any analysis will require legal advice from the Firm.