Southern Ecuador’s Cuenca city bans new large-scale mining

Residents of the Southern Ecuador city of Cuenca have voted in favour of banning future large-scale mining activities in five nearby watershed zones – an area that stretches over 3,100 square km (1,197 square miles) and is home to more than 580,000 people.

The poll results represent a win for Cuenca, the country’s third-largest city in the province of Azuay, which hosts several mining assets, including Chinese-owned Junefield’s Rio Blanco gold project, SolGold’s (TSX: SOLG; LSE: SOLG)) Sharug and Canada’s INV Metals’ (TSX: INV) Loma Larga gold-silver-copper project.

The city pushed last year for the referendum on whether or not communities could decide the fate of mining projects in the area.

Ecuador’s highest court handed the community a victory, allowing them to set a date to vote. The ruling made clear that locals could only have their say on mining rights not yet granted, not on licensed projects.

More than 80% of the electorate voted this week in favour of the ban, which proponents argue reinforces “the rights of Nature,” guaranteed by the country’s 2008 Constitution.

The result of the referendum is legally binding, meaning Ecuador’s next president will have to implement it.  The country is headed toward a presidential runoff in April, as the results of this month’s elections remained disputed.

Left-wing indigenous candidate Yaku Perez, an environmental lawyer, won 19.38% of the vote in the February 7 election. That’s just 33,000 votes behind his second-placed rival, right-wing former banker Guillermo Lasso.

Perez, an open opponent of mining near watersheds, alleges there was fraud to keep him out of the run-off. He was narrowly displaced by Lasso from second to third place in the middle of the count, now halted.

While there are no big mines operating in the area yet, the popular vote’s results could derail more than 40 copper, gold and silver concessions.

“That’s debatable” mining lawyer Xavier Andrade told Bloomberg News last week. “Who will carry out exploration if you won’t be able to recover the investment? (…) This will all end up in another legal battle before the Constitutional Court,” he said.

Ecuador has gained ground as a mining investment destination over the past two years, but opposition to the extraction of the country’s resources could thwart the government’s plan to attract US$3.7 billion in mining investments by 2022.

Last year, mining in Ecuador generated US$810 million in exports, US$430 million in taxes and US$374 million in foreign direct investment.