MICLA

McGill Research Group Investigating
Canadian Mining in Latin America

Ecuador

Key Data

Population:15,223,680 people Area:256,370 km2 Density:59 people / km2 Demographics:65% Mestizo
25% indigenous
7% white
3% black
Mineral Resources: GDP:$128.0 billion GDP per capita:$8,407 GINI:49

History

Overview:

Human settlement in Ecuador dates back to the end of the last ice age, with a number of important indigenous civilisations including the Las Vegas, Valdivia and La Bahía cultures arising there before the arrival of the Inca in the late 15th century. In 1533 the Inca Empire was conquered by Francisco Pizarro and what is now Ecuador passed under control. Spanish rule was marked by the demographic devastation of indigenous people due to disease and the harsh nature of the Spanish encomienda system of forced labour. The export boom of the late 19th and early 20th century brought increasing wealth to the country’s economic elites but did little to improve the livelihoods of most Ecuadoreans, especially those of indigenous groups who had their communal lands expropriated to grow export crops. This dissatisfaction lead to the rise of populist leaders like five time president José María Velasco Ibarra who promised a better deal for marginalised groups. However, once in power these leaders did little to resolve the inequities of Ecuadorean society resulting in increased social turmoil culminating in a reformist military coup in 1963 by officers fearful of the possibility of a communist takeover. Military governments rule Ecuador until 1979 when the country gradually began to transition to democracy. In recent times continued economic and political instability has continued to plague Ecuador. In 2007 Ecuadoreans elected Rafael Correa, a democratic socialist, as president based on a policy of combating poverty and greater social inclusion.

Role of mining within national history: As stated below, large scale mining in Ecuador is a comparatively recent phenomenon and will be dealt with in the Political Context and Social Context sections instead. However, Ecuador has a long history of artisanal mining dating back to the colonial period. As Lane notes in his book Quito1599, mining was extremely important to the economic growth of the new colony with the Royal Audience of Quito producing a total of 1 034 935 in pesos de buen oro (each being 4.2g of gold) between 1600-1639.[1] Gold production in places like Zamura and Santa Barbara relied heavily on forced indigenous labour, rather than African slaves as was common in other Spanish colonies.[2] Much like today gold production was mostly centred in the south and east of present day Ecuador, primarily in the Andean piedmont.[3] Often miners came into conflict with indigenous peoples, the most striking case being the Great Jívaro Revolt of 1599 in which the Jívaros of the Cordillera del Cóndor region (presently the site of a series of conflicts between Canadian mining companies and indigenous peoples on both sides of the Peruvian-Ecuadorean border) successful repelled Spanish attempts to conquer them, and to prevent the exploitation of one of the richest placer gold deposits in South America.[4] This history of artisanal mining continues to the present day, mainly in the south of the country, where clashes with foreign owned mining companies is becoming increasingly common, as large multi-nationals expand operations into the region.[5]

History of resource exploitation: Like many Latin American countries resource exploitation boomed in the late 19th century and early 20th as the country became integrated into the world economy and increasingly dependent on raw material exports for trade. In Ecuador the principle export products were bananas and cocoa and later in the 1930’s petroleum.[6] Bananas are mostly grown along the coast,[7] while most cocoa plantations and oil fields are located in the west of the country in the Amazon region.[8][9] This export boom however, lead to increasing dependency on often volatile world markets. In 1955 42% of Ecuador’s foreign earning came from bananas alone, far exceeding any[10]other export. Even today 90% of Ecuador’s export earnings come from raw materials, though oil has replaced bananas as the principal export good. With this resource based economy has come important environmental and social consequences. It strengthened the land-owning elite, and eroded traditional, often indigenous land holding patterns. Increased oil extraction in the Amazon Rainforest was also to have detrimental effects on the local environment. Ecuador was the site of what some have called the worst oil disaster in the world. In the early 70’s Chevron (formerly Texaco) is accused of dumping 18 billion gallons of crude oil in unlined, open pits in the Ecuadorean rainforest.[11] Thus while large scale mining is a relatively new phenomenon, Ecuador already has had a long and troubled history with resource exploitation. The question remains how to balance the dangers of extractive industries against the need for export dollars in this still very poor country?



[1] Lane, Kris. Quito 1599. P 135.

[2] Ibid. P 129.

[3] Ibid. P137.

[4] Ibid. 116.

[5] Moore, Jennifer. Ecuador: Small-Scale Miners Questioning Large-Scale Interests in Southern Amazon. Upside Down World.

[6] Background on Texaco’s Petroleum Company’s Former Operations in Ecuador. Texaco.

[7] The Banana Sector in Ecuador. United Nations Environmental Program. P 84.

[8]Ecuador-SUCCESS Alliance: Promoting Increased Cocoa Production for Ecuadorian Farmers. ACDI/VOCA.

[9] Lago Agrio. Listofoilfields.com.

[10] Parsons, James J. Bananas in Ecuador: A New Chapter in the History of Tropical Agriculture. Economic Geography.  P 203.

[11] Amazon tribe sues Texaco for $6 billion. Al-Jazeera English.

Mining Characteristics

 

Geological overview: Situated on the Pacific coast of South America, the small country of Ecuador is made up of four distinct ecological zones, The Pacific coast (an important agricultural region), the Highlands (formed by the Andes mountains that run through the centre of the country), in the east of the country, and the Galapagos Islands off the Pacific coast.[1] Despite not having a long history of large-scale industrial mining, Ecuador is an incredibly mineral rich country with significant gold and copper deposits in the Cordillera del Condor region in the Ecuadorean Amazon.[2] The region constitutes the northern portion of a series of porphyry deposits formed between 150 million and 30 million years ago, rich in high grade copper, silver and gold.[3] Ecuador also has an important petroleum sector, with crude oil accounting for 45.5% of Ecuador’s exports in 2009.[4]The main centre of oil production is the Northern Amazonian region around Lago Agrio.[5]

 

Number and type of mines: There are 51 mine properties in Ecuador, [6]however, most are in there exploration stage. The majority of mining in Ecuador remains artisanal, with investment in mega-mining projects a recent phenomenon.[7]

 

Water issues: Located on the equator Ecuador experiences high levels of rainfall (averaging around 7 inches in the wet month of April).[8] In the Amazonian region in the east of the country and the Cordillera del Condor region where most mining projects are base precipitation averages 300 to 400 cm a year[9] and 240 mm respectively. [10]It is also home to a number of key river basins such as the Rio Esmeraldas, the Rio Guayas and the Rio Cayapas which drain from the mountains to, in the case of the Esmeraldas and the Guayas, the Pacific, and in the case of the Cayapas into the Amazon basin.[11] Water issues are often key areas of concern for communities fighting against mining projects, especially in the Amazon region. The high levels of rainfall make surface and groundwater contamination, especially due to run-off and acid mine drainage, makes mining in the region extremely risky.[12] The great biodiversity and ecological fragility of these regions only compounds the problem.[13]

 



[1] About Ecuador: Regions. Embassy of Ecuador-Washington, DC.

[2] Chicaiza, Gloria. Mineral Extraction and Conflict in Cordillera del Cóndor, Ecuador. Acción Ecología Ecuador.

[3] The Cordillera del Condor Gold-Copper Belt in Northern Peru. Dorato Resources Inc.

[4] Ecuador at a glance. The World Bank.

[5] Lago Agrio. Listofoilfields.com.

[6] Infomine: Company Properties: Ecuador. Infomine.

[7] Rafael Correa se alinea a las minera transnacionales. No a la Mina.

[8] Ecuador. Climatetemp.info.

[9] Ecuador: Oriente. Ecuaworld.

[10] Zamora weather. World Weater Online.

[11] Water Resources Assesment of Ecuador. US Army Corps of Engineers.

[12] Large-Scale Mining in Ecuador and Human Rights Abuses. International Federation for Human Rights. P.18-19.

[13] Chicaiza, Gloria. Mineral Extraction and Conflict in Cordillera del Cóndor, Ecuador. Acción Ecología Ecuador.

 


Economic Context

 

Importance of mining to the national economy: Traditionally the mining industry in Ecuador has been very small, with very little foreign investment in large scale projects until the 1990s when changes in the mining code, opened the way for large scale foreign investment.[1] As the industry site Infomine notes “Since 1991, mining companies have submitted applications to explore almost 18 million of Ecuador’s 25 637 000 hectares, more than 69% of the country.”[2]

 

Unemployment levels: 6.5% (as percentage of total labour force, 2007-2011).[3]

 

Raw materials as a percentage of exports: 90% (55.9% fuels and mining products, 34.1% agricultural products). [4]

 



[1] Large-Scale Mining in Ecuador and Human Rights Abuses. International Federation for Human Rights. P.6.

[2] Ecuador at a Glance. Infomine.

[3] Unemployment, total (% of labour force): Ecuador. The World Bank.

[4] Trade Profile: Ecuador. The WTO.


Political Context

 

Brief political overview: After a period of intense political instability in the 1980s and early 2000’s (Ecuador went through 13 presidents from 1979 to 2007 ), 2006 saw the election of the popular, socialist President Rafael Correa.[1] Correa ran on a platform reforming the constitution, expanding social spending and taking a stronger stance against US intervention in the region.[2] Key to President Correa’s success was the support of previously marginalised groups in the country such as indigenous groups and the poor, who felt they had not benefitted from Ecuador’s oil driven economy, and mobilised effectively to get Correa elected.[3] Upon becoming President, Correa allied himself with other leftist leaders in the region, notably Hugo Chavez of Venezuela and Evo Morales of Bolivia, defaulted on Ecuador’ $3.3 billion debt, accrued, he argues, due to the mismanagement of previous military governments, rewrote the flawed constitution and doubled social spending particularly in regards to education, health care and infrastructure. These reforms subsequently won him a second term in 2009 with over 50% of the vote. [4] However, since then President Correa’s politics angered many within the country, most notably those same indigenous groups that brought him to power and on the 1st of October, 2010, President Correa was attacked by police officers who subsequently besieged him in a hospital he was staying in, in what the President alleges was a coup attempt.[5] A number groups came out in protest to support the President, but not necessarily in support of the President’s current policies.[6] Indigenous organisations, including CONAIE (The Confederation of Indigenous Nationalities of Ecuador, Ecuador’s largest and most important indigenous group) have been highly critical of the President they once supported. Of chief concern to indigenous groups is the manner in which President Correa has promoted the developmental benefits of the mine and gas industries, at the expense they feel of indigenous sovereignty and environmental concerns, as well as the increased criminalisation of protest in the country. In their statement regarding the coup attempt CONAIE said:

 

Faced with the criticism and mobilization of communities against transnational mining, oil, and agro-industrial companies the government, instead of creating a dialogue, responds with violence and repression. . . The only thing this type of politics provokes is to open spaces to the Right and create spaces of destabilization.[7]

 

CONAIE’s concerns is evidence of larger split among Correa’s supporters between pro-and anti-mining groups. While organizations such as CONAIE and CONFAIE, as well as former assembly president Alberto Acosta, a key figure behind the 2008 mining moratorium, have opposed large scale mining projects, President Correa and many members of his parties have increasingly aligned themselves with the interests of foreign mining companies.[8] These groups have increasingly taken to the streets to protest the Correa government’s new mining policies, resulting in police crackdown against environmental and anti-mining activists.[9] Indigenous leaders protesting against mining and gas projects have found themselves arrested by the Ecuadorean government under anti-terror laws and indigenous groups increasingly excluded from decision making on matters that concern them.[10] In a piece for Oxfam’s Latin America Bureau, Cecilia Chérrez notes how over 200 environmental activists have been prosecuted under new laws which make it harder to express dissent. These laws include stricter sentences for closing public areas, greater power to the police to search the headquarters of groups investigating state officials and presidential authority to dissolve organizations that are perceived as violating public order.[11]

 

Mining code, legal precedents for mining:

 

As has been stated earlier, Ecuador does not have a long history of large-scale industrial mining. However, in 1991 a new Mining Code formulated with World Bank supervision, was implemented opening the country up for foreign investment, over the following decade the obligations of mining companies were further reduced, making it easier to apply for concessions and with fewer taxes needing to be paid.[12]  Many members of President Correa’s government initially opposed to mega-mining, stating that respecting the environment and the rights of indigenous peoples were of key concern if any mining was to take place.[13] It was with this in mind that on the 18th of April, 2008 the Constituent Assembly of Ecuador cancelled 80% of the concessions in the country, with companies only able to reapply after they had met more stringent criteria for more “responsible” mining.[14] This was accompanied with a sixth month moratorium while the government formulated a new mining code.[15]This decision was later overturned in January of 2009 when President Correa approved a new law that renewed the cancelled concessions and while imposing minimum royalties of 5%, does little to protect indigenous groups or address environmental concerns.[16] Canadian  companies and embassy officials were alleged to have been instrumental in putting pressure on the Correa government to overturn the moratorium.[17] As Jennifer Moore notes, Canadian ambassador Christian Lapointe personally helped set up a meeting with President Correa and Canadian companies, and played an important behind the scenes role in negotiating the new, pro-mining law.[18]

 

Government attitude towards foreign mining companies: Despite earlier efforts to restrict the negative impacts of mining projects and respect local sovereignty, the government of Rafael Correa’s attitude to foreign mining is currently quite supportive. Ever since 2009 Rafael Correa has repeatedly stated that exploiting Ecuador’s mineral resources is key to its development, saying “we are going to pass into a new era, the mining era”, and criminalising those groups that seek to halt its development.[19]

 



[1] Ecuador’s Rafael Correa claims victory in election. The Guardian.

[2] Ibid.

[3] Ecuador’s Challenge: Rafael Correa and the Indigenous Movements. Upside Down World.

[4] Ecuador’s Rafael Correa claims victory in election. The Guardian.

[5]Ecuador’s President Attacked by Police. The Guardian.

[6] Ecuador’s Challenge: Rafael Correa and the Indigenous Movements. Upside Down World.

[7] Ibid.

[8] Moore, Jennifer. Canada Throws Ecuador into Reverse. The Tyee.

[9] Chérrez, Cecilia. Criminalisation of the Social Protest in Times of the ‘Citizen Revolution’.  LAB.

[10] Picq. Manuela. Indigneous resistance is the new “terrorism”. Al-Jazeera English.

[11] Chérrez, Cecilia. Criminalisation of the Social Protest in Times of the ‘Citizen Revolution’.  LAB.

[12] Large-Scale Mining in Ecuador and Human Rights Abuses. International Federation for Human Rights. P.6.

[13] Ecuador: Constitutional mandate freezes mining exploration. Mines and Communities.

[14] Ibid.

[15] Mychalejko, Cyril. Ecuador Undergoes Mining Makeover. Upside Down World.

[16] Ecuador’s new mining law prompts further protests and concerns. Mines and Communities.

[17] Moore, Jennifer. Canada Throws Ecuador into Reverse. The Tyee.

[18] Ibid.

[19] Ecuador apuesta su crecimiento a la minería a gran escala. El País.


Social Context

 

Important social movements:

 

The most important social movement to emerge in Ecuador linked to mining is the Confederation of Indigenous Nationalities of Ecuador or CONAIE, a group founded in 1986 which “works primarily to strengthen indigenous organizations while we support specific community demands such as territory or water rights, and challenges government policies that threaten indigenous peoples.”[1] Since 2009 CONAIE has been highly critical of Correa’s increasingly pro-mining position and has frequently held protests against him such as in September of 2009 when CONAIE organized marches and roadblocks in opposition to the government’s changes to the water law.[2] According to CONAIE 70% of Ecuador’s 3.4 million strong indigenous population (roughly 25% of the total population) are members of the group making them an important political block advocating for indigenous rights and issues.[3]

 

Civil society: Civil society has historically been weak in Ecuador, though stronger in export zones where in the mid-twentieth century unions and other civil society groups began to emerged, however, often controlled by and dependent on the government.[4] In the mid 1980’s new social groups began to emerge such as the New Indigenous Movement, of which the CONAIE is the best example, and since 1998  la Defensoría del Pueblo (People’s Ombudsman) emerged that made it easier for civil society groups to influenced government decision making.[5] Thus while organised civil society in Ecuador remains scarce, in recent years it has emerged as an increasingly important political force.

 



[1] The Confederation of Indigenous Nationalities of Ecuador. CONAIE.

[2] Ecuador’s Indigenous Movement Mobilises for the Water. Intercontinental Cry.

[3] The Confederation of Indigenous Nationalities of Ecuador. CONAIE.

[4] Andreetti, Ana Christina, Fernando Bustamante and Lucía Durán. Ecuador’s Civil Society. Civicus. P19.

[5] Andreetti, Ana Christina, Fernando Bustamante and Lucía Durán. Ecuador’s Civil Society. Civicus. P21.