Gold Mining in Ecuador
Supporting the Matrix Production Change
LOGISTICS TUTORIAL WORK 6 -A
Jorge Arce Valle
MSc. Max Galarza
• Mining is the economic action,
commercial and industrial based on
the exploitation and extraction of
mineral wealth found in the soil and
subsoil, for which purpose there are
mines and mining operations.
Gold Mining in
• In Ecuador there is gold in 228 streams
located on the flanks of the Andes. In
Esmeraldas, in the tributaries Palabí, San
Juan, Mira, Tululbí, Bogota, Cachabi, Santi
ago, Cayapas, Barbudo, Zapallo, Canandé
Blanco, according to the Mining Geological
Research Foundation (Fungeomine).
• According to from the Chamber of
Mines, in Ecuador there are significant gold
mineral reserves (71.667 million ounces).
Ecuador's mining sector generated
economic incomes to the country since
January to December of 2012 total of
represents incomes for gold ) and hired
RIENTE S.A AND GOLD
Mirador project has copper and gold
reserves bordering the 4,500 million
For the exploitation of mineral, ECSA
(ECUACORRIENTE COMPANY) will
invest 1,400 million in the first five
years and production will start in 2014.
It is expected to reach extraction peak
two years later.
FRUTA DEL NORTE
The gold project is located in the parish of Los Encuentros, Canton ,
Zamora Chinchipe. This field is expecting to exploit 6.4 million
ounces of gold.
The Government of Ecuador and Kinross have been unable to agree on the
economics and legal terms to balance the interests of investors.
Canadian company also concluded that there is no interest in the
company and investors to promote the development of Fruta del
RIO BLANCO (AZUAY)
The Rio Blanco mining project has a reserve of 991 000
ounces of gold and 4.7 million ounces of silver.
Another project that has the Azuay is called Rio Blanco; this
project is waiting environmental certification to start its
This mineral deposit is located in the sector Molleturo, 80
kilometers from Cuenca, and it is managed by International
Minerals, based in Arizona (USA).
The Defenders of the Pachamama Molleturo parish group
have established their protest, they said that “the water
coming down from the mountains is already contaminated
and could be in the future a serious problem for the
In the parish of Tarquinia, about 15 minutes from Cuenca, it was held in
October a referendum that the inhabitants define the future of mining
projects, especially the one located at Quimsacocha.
The referendum was held in Tarquinia October 2 with the question that
if the public did not want or mining in Quimsacocha. The call was
questioned by the Government; from the lack of official endorsement
that was criticized.
The referendum attracted over 1000 public in the area, 958 of them
decided that there should be no mining since it should bring
pollution to waters that reach Cuenca.
Following this referendum, Carlos Pérez, leader of the Tarqui parish, He
said that “the results were sent to several international organizations,
including the UN, to act and realize the damage that should occur in the
DEPOSITS IN ECUADOR
US $ TOTAL
• Increase in the GDP (Gross Domestic Product)
• Sources of employment
• By running a new mine we can install local capacity, creating jobs, developing
local entrepreneurs. The communities become allies of the business rather
than its detractors.
• There are many new mining companies working in this project. The community
should participate in the co-design project. The company-community
relationship is long term and is based on dialogue.
• Understand that caring for the environment and local development are part of
the business strategy. It is important the role played by the state in both the
approval and supervision of projects and the use of royalties. Are
recommended public-private partnerships that enable collaboration in
education, environmental protection, social dialogue, land use planning, among
• In illegal mining an important disadvantage is the Increased pollution because
there is nobody who regulates and control them.
• The technology that we need to extract gold from the mines have been obsolete
and therefore we need foreign help this means that gold mining has a foreign
dependence, and also this foreign technology is expensive so this will represent a
huge expense for the government.
• Big accidents could happen because we do not have a lot of training people who
could execute mining work.
• Most of the raw materials used today come from underground. These are so
important in today's economy, because the wealth of countries like Ecuador are
natural resources this is how Ecuador support its economy.
• the growth of mining activity, has seen accompanied by the lack of efforts to
environmental protection regulations, this led to indiscriminate exploitation,
regardless of considerations of depletion of existing resources, this has caused a
contamination levels hard to combat and reconstruct.
The site of action of illegal mining in
Ecuador (northern Amazonia and
north coast) reveals proximity to
sites of action of Colombian irregular
groups that may cross borders to
obtain resources for their activities.
NEW MINING LEGISLATION
OLD MINING LAW
Did not exist
NEW MINING LAW
Art.24.-Special mining areas
Art 80.-It is prohibited damage to the flora and Art 86.-Prohibition of the use of mercury in
fauna, deforestation, erosion and sedimentation mining operations
in mining activities
Art 18.-The royalty rate per hectare were between Art 93.- Fixing a minimum royalty of 5% on sales
of primary and secondary mineral and 8% for
gold, silver and copper. There are set maximum
amounts. It has the small mining royalties pay
3% of sale
Art 57.-the penalty was
one month or three
years in prison or a fine of a minimum of 10 and
a maximum of 20 unified basic salary depending
on the severity of the infraction
Art 57.-It will be sanctioned by a fine of two
hundred to five hundred unified basic salary
depending on the severity of the infraction, also
will have obligation of restoring the ecosystem
and compensate people and communities
NEW MINING LEGISLATION
Art 19.-For the development and implementation of
mining policy, the Law 126 held that the executed
through the Secretary of Mines, National Directorate of
Mines and Regional Directorates of Mining.
Art 5.-The new mining law develops and executes
the mining policy, through Sector Ministry, the
Agency for Regulation and Control of Mining,
National Research Institute of Geology, Mining,
Metallurgy, and state mining company
Art 23.-In the small-scale mining, the Mining Act of
1991 includes the figures of condominium and
cooperative miners, and that one of the objectives of
the mining administration is provide organizational
assistance to the community mining or artisanal
Art 138 -134.-Legal recognition of artisanal, small
mining activities, It incorporates medium mining
production volumes. From 301 to 1,000 tons per day
for underground mining of 1001-2000 tonnes per day
open pit mining.
The state makes its mining activities through the In the new law mining, the activities are conducted
National Directorate of Geology.
through the National Mining Company
Was not created
Art 12.-Constitution of the national mining company
WHAT IS MATRIX PRODUCTION?
The way that society is organized to produce certain goods and services is
not limited to purely technical or economic, it also has to do with the whole
set of interactions among social actors using the resources they have at their
disposal to carry out productive activities. In this assembly, including the
products, production processes and social relations resulting from these
processes, called productive matrix.
The ecuadorian economy has been based on the
exports of raw material to international markets and at
the same time, Ecuador is an importer of the products
based on its own raw material.
SECRETARÍA NACIONAL DE PLANIFICACIÓN Y DESARROLLO
The lack of
Ecuador imports elaborated products
THE MATRIX PRODUCTIVE AND ITS RELATION
WITH GOLD MINING ACTIVITY.
The main objective is moving forward to a
different economy dependence, where the
knowledge allows the country to move from
limited resources economy
it means from the production and exports of
raw materials to the application of the
science to achieve the economy of infinite
resources, based on the enforcement of the
abilities and knowledge of the most
valuable source that Ecuador has which is
The economy of Ecuador has been based on the export of oil
and raw materials without applying knowledge and technology as
a result of this, Ecuador has imported elaborated products that
were produced with Ecuadorian raw materials paying high prices
This new goal that was proposed for the government of the
president Rafael Correa to change the productive matrix involves
many sectors and industries which are considered important and
also they need the application of knowledge, the use of
technology, innovation and instead of intensifying exports, to