Codelco, Enami exploration project in Ecuador faces bumpy future, possible failure

By
Tuesday, February 19, 2013

Despite receiving municipal approval to begin exploration, Chilean state copper producer Codelco and Ecuador's state miner Enami EP should brace themselves for failure in developing the Junín deposit in the Toisan mountain range in Cotacachi municipality's Intag area in Ecuador, according to a spokesperson from local grassroots environmental organization Decoin.

The companies got the green light to go ahead with exploration on February 13, but that decision is being questioned by community members on several points. According to the spokesperson, the 5-4 approval violates legally binding land use and development plans for the area as well as a local ordinance designating the region as a protected area.

Furthermore, no prior consultation process was carried out, violating communities' constitutional right to be consulted on any decision that could impact their environment. "That has been violated from day one," the spokesperson said.

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When contacted regarding the latest development, Codelco said that the company could not comment on the matter. Referring in general to Codelco's work in the country, a source from the company said in a statement emailed to BNamericas that the company "carries out exploration in Ecuador in accordance with its status as a world leader in mining that respects the communities where it operates, fully complies with local regulations and applies the same standards and values that it keeps in Chile."

Enami did not immediately respond to requests for a comment.

COMPLICATED HISTORY

The Junín deposit was first discovered in the '90s by Japan's Mitsubishi, which met enough community resistance to lead it to abandon the area following the completion of an environmental impact study for a mining project that identified deforestation and the drying up of the ecosystem as likely impacts, the Decoin spokesperson said, noting that the area's cloud forest ecosystem is one of the most biodiverse on the planet.

Later, Canada's Copper Mesa (formerly Ascendant Copper) came in and took over the concessions, but again, met with intense opposition from the community. In 2008, the company had its concessions reverted back to the state due to Copper Mesa's failure to make required license payments.

As for Codelco, the Chilean copper giant has had an early-stage exploration agreement with Enami EP in place since 2008. However, in July 2012, the company signed an agreement with Ecuador for more advanced exploration at Junín, with 2H13 given as the tentative start date for drill work.

WHAT TO EXPECT

According to Decoin, the recent decision by the municipal government to allow exploration to go ahead despite the previously mentioned complications comes down to playing the politics of President Rafael Correa, who has expressed much more interest in the development of the mining sector than his predecessors.

"Correa is interested in the development of large-scale mines... I'm guessing, but I'd never be able to prove it, that the order came from up high that this needed to go ahead," the spokesperson said.

The national government will likely attempt to push ahead with the project, though certainly they will be met with the same civil resistance that community members have successfully implemented in the past, said the spokesperson: "There's no way that the government will be able to get away with imposing this project."

The most obvious next step involves Codelco remaining on the sidelines while the government attempts to obtain social license for the project, though a similar support-garnering mission was kicked out of the area just this summer, the spokesperson said.

"The tragedy is that it is going to cause a lot of social conflicts in the meanwhile and eventually it [the project] will fail for cultural, social and - one of the stronger reasons - environmental reasons," the spokesperson said.