Ecuador referendum result complicates mining outlook

Subject

Mining outlook.

Significance

On March 16, Ecuador’s National Assembly overturned a law that provided tax breaks for mining companies. The move was made in accordance with the results of February’s national referendum, which look set to complicate the prospects of Ecuador’s mining sector. The seven-question plebiscite, which President Lenin Moreno launched to demonstrate popular support for his political and economic programme, included two mining-related questions -- one on overturning the tax-break law and one seeking to place stricter limits on mining activities. Both were backed enthusiastically by the electorate.

Impacts

• Rising world metal prices will increase the desire of mining firms to exploit Ecuador’s largely untapped mineral deposits.
• Mining will be a key issue in 2019 local elections, especially in southern highland provinces where large deposits are located.
• Mining concessions will face greater scrutiny as environmental organisations seek to ensure they do not contravene the constitution.