Ecuador court casts doubts on mining projects future, allows public referendums

The Cascabel copper-gold project, 180 km north of the capital Quito, may become one of the largest copper-gold porphyry systems ever discovered. (Image: Alpala camp. Screenshot from SolGold corporate video 2017.)

Ecuador’s constitutional court has ruled that communities have the right to hold public referendums on whether or not to allow a mining project to go forward, paving the way for opposition to future developments.

The ruling comes after the court analyzed three decisions made last year on the topic, including one that rejected requests to vote on the future of SolGold’s (LON, TSX:SOLG) flagship copper and gold Cascabel project — set to become one of Ecuador’s biggest mines.

The constitutional court concluded that there was no clear and express prohibition in the country’s constitution against undertaking popular votes about mining. It also noted, local paper El Comercio reported, that citizens are guaranteed participation in deciding socio-economic matters, particularly when they have a clear effect on the environment.

The ruling concludes that there is no clear and express prohibition in the country’s constitution against undertaking popular votes about mining

The legal challenge communities face now is to frame a referendum’s question in a legitimate way. The three attempts to hold public consultations last year failed because they did not guarantee the voters’ “full freedom to choose” nor did they stick to the terms of Ecuador’s constitution, the high court said.

The resolution represents a victory for the southern province of Azuay, which is once again asking to make mining permits subject to popular approval.

The area hosts several projects, including Canada’s INV Metals’ (TSX-V: INV) Loma Larga gold, silver and copper project and SolGold’s Sharug project, which the miner believes has considerable potential for the discovery of a world-class orebody.

Ecuador has gained ground as a mining investment destination in the past two years, but opposition to the extraction of the country’s resources could thwart the government’s plan to attract $3.7 billion in mining investments over the next two years. That’s significantly up from the $270 million it received in 2018.

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