China strengthens mining presence in Ecuador with SolGold

China’s presence in major mining projects in Ecuador will be strengthened once Jiangxi Copper Corp (JCC) completes the acquisition of 100% of SolGold, expected this quarter, expanding China’s control over key copper and gold assets in the country.

The transaction, valued at £800 million (about US$1.17 billion), is subject to shareholder approval and the fulfillment of regulatory conditions, after the boards of SolGold and JCHK, a subsidiary of JCC, agreed to the terms of the acquisition on December 24.

When the transaction is completed, Chinese state-owned copper company JCC will control Cascabel, SolGold's flagship copper and gold project, which is expected to rank among the 20 most important gold and copper mines in the world.

Cascabel is located in Lita, Imbabura province, in northern Ecuador. The full development of the mine is estimated at US$4.2bn, of which the first phase will require US$1.5bn.

The sale of SolGold currently has support commitments from BHP (10.3%), Newcrest International Pty (10.3%), Maxit Capital (5.1%), the directors of SolGold (around 3%) and JCC (12.2%), adding up to more than 40% of the shareholding.

The remaining shareholders, including smaller institutional investors and retail investors, still need to define their position in order to reach the required majority.

Although the appeal of the premium offered and the support of the main shareholders suggest that the transaction will move forward, its approval will ultimately depend on the decision of those groups and on meeting regulatory conditions, but the sale is expected to be completed without major issues.

The first phase of Cascabel includes the initial development of the mine, the first module of the processing plant, and the basic infrastructure.

At a recent mining conference, Luis Mario Sánchez, CFO of SolGold in Ecuador, said that “the proven and probable reserves of Cascabel amount to 540 million tonnes, according to the pre-feasibility study, which represents just 18% of the total estimated resource identified to date.”

The project is designed as a staged block caving mine, the first of its kind in Ecuador.

According to SolGold's latest projections, construction of the mine would begin in late 2027 or early 2028.

China already controls in Ecuador the  Mirador mine, the only large-scale copper operation in production in the country, in addition to the Panantza-San Carlos project, also copper, which is at an advanced exploration stage and whose preliminary investment is estimated at US$3bn. 

For Mirador, its operator,Ecuacorriente, a subsidiary of the CRCC-Tongguan consortium, plans to complete phase II in 2026, which seeks to increase processing of the Mirador I (south) deposit to 80,000t/d from the current 60,000t/d and develop the Mirador Norte pit to process another 60,000t/d, at a cost of around US$650mn.

According to estimates by Unctad from last year, global copper demand would grow by more than 40% by 2040, while supply is not advancing at the same pace, so meeting that demand could require the opening of 80 new mines and an investment of US$250bn by 2030, driven by the expansion of electric vehicles, renewable energies, data centers and smart grids.

In this scenario of growing pressure on global supply, Jiangxi Copper’s acquisition of SolGold is emerging as a strategic move for China, by securing access to one of the region’s most promising deposits.

(The original version of this content was written in Spanish)