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  • Writer's picturejasvrobinson

Notes on Ecuador's Presidential Election

Updated: May 29, 2021

The results of Ecuador's presidential election are reassuring to me as an investor. Either candidate would have allowed mining, but now with a Lasso-headed administration, I know that there is an experienced, financially-savvy manager at the helm. Citizens and that portion of Ecuador's business community who are serious about stemming corruption and economic reform are pleased.

However, his margin of victory was narrow, and many of the votes he received were not for him, but rather against a return to the corruption of Correa. And the rise of Rafael Correa 15 years ago was partly a result from the actions of the monied class (like Lasso) who transferred their Ecuadorian gains to off-shore tax havens like Panama. Lasso at one time owned a Panamanian bank. Correa put an end to this type of economic sabotage. You can be sure Lasso no longer has assets outside the country. Ecuadorian law does not allow it. See article.

But a Lasso victory is a bitter pill to swallow for many and were it not for the annulled votes of Yaku Perez's supporters, the presidency could have gone to Arauz. Despite the fact that Perez's vice president indicated her vote for Lasso, she did so with expressed skepticism. And I'm sure in order to secure Xavier Jerves' support, Lasso would have needed to express a sincere willingness to work with the environmental contingent.

During the presidential campaign neither candidate said much about how they would handle resource extraction. But the environmentalists have been preparing and will no doubt come with their maps and data to demonstrate their resource values. I hope the mining lobby can do likewise and demonstrate, not just a project-by-project evaluation of impacts vs benefits, but how the country's resources can best be managed nationwide. The big picture. In other words, the cumulative impacts of mining development. Especially given the limited environmental assessment that was done prior to opening the mining cadaster.

Now that the election has passed and the various interests within Ecuador are jockeying for the new administration's attention, I can't help but draw comparisons with the mineral resource development history of California and Montana. The environmental contingent (anti-extractionists) has long been preparing at the national level to highlight Ecuador's natural resources and in particular, water. They have a long-established methodology and historical precedent on which to model their efforts, a big international war chest, and significant intellectual horsepower. Here is an example website.

I hope the professional mining industry can not only capitalize on the "unique" investment opportunity that is Ecuador but also can utilize it's experise to assist Ecuador in maximizing the benefit from both their high-value mineral assets, as well as their high-value environmental assets. Especially water. Water can be considered a precious commodity and monetized. Is the industry ready to respond to the questions that will inevitably come? Who now has the ear of el Presidente and his advisors regarding resource extraction and how well-armed are they with information about the country's resources to begin the negotiation process?

Individual projects need to be assessed on a watershed basis. What does full build out of Zamora River Basin really mean in terms of water quality and wildlife? What does full build-out of the Cangrejos District upstream from the Santa Rosa public supply mean in terms of impacts to water quality. Or El Domo and the Lumina/Anglo American concessions? How are Salazar and Adventus safeguarding the public's natural resources on the projects they control. To say that all applicable requirements are being met is insufficient.

Lastly, as a promising project with an expedited timeline and approval process, I hope the El Domo project can boast an innovative reclamation plan that anticipates development of multiple ore bodies and addresses potential impacts to water quality. That would include alternative pit reclamation scenarios. No endless chain of permit amendments. The initial permit needs to anticipate full build-out of the district with emphasis on the Curipamba concession. The process should include robust public involvement with an official public comment period with responses from the ministry/company.

I am a shareholder of Atico, Adventus, Salazar, Lumina, Luminex, Solgold, and Lundin Gold (FDN). Also Challenger and Titan. An eight-year resident and long on Ecuador.

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