Environmental Engineering Reference
In-Depth Information
in Ecuador dropped and fear of “nationalisation'' of extractive industries potentially
associated with expropriation of property was widespread (Santacruz 2007). By 2008,
after years of mixed signals and ambiguous statements, it became clear that the Correa
administration was interested in mining exploitation and welcomed foreign corpora-
tions for large-scale mining exploitation (e.g. Denvir 2008; Denvir and Riofrancos
2008). The Ministry of Mines and Petroleum (MMP), under Galo Chiriboga's lead-
ership, complied with the Assembly´s mandate to draft a new mining law that would
attract large-scale investment and guarantee substantial state revenues at the same time.
Among its highlights were: openness to large-scale and open-pit mining; establishing
the state as the main actor in charge of carrying out Corporate Social Responsibility
projects; royalties ranging between 5% and 8% depending on the size, investment and
value of reserves of the concession; and the switch from a “mining title'' to an “explo-
ration contract'' for companies. The provision for a Windfall Tax envisions charges for
as much as 70% of profits (Santacruz, August 15 2008). In spite of opposition from
social movements, the new mining law was finally approved on January 14th, 2009,
with an overwhelming majority of 50 to 15 in the National Assembly.
7.5.2 Mines and ownership
In terms of the domain of the state over mines and deposits, the mining acts of 2000 as
well as 2009 begin by establishing that the Ecuadorian state is the owner of all mineral
wealth in the country. Despite this shared provision, the two laws contain several
differences that emerge from the perspective of property rights theory by means of
looking in detail at the entitlement of specific rights. These legal provisions stipulate
that collective-choice level decisions are in the hands of the state. At the operational
level, however, several bundles of rights are transferred to the private sector. Mining
titleholders do not participate in any of the decision-making processes for management
of their concessions, such as the organisation and granting of permits and concessions.
Instead, the state is in charge of this process based on applications and a tendering
process. Thus, titleholders may not decide who gets to participate or not on a tender,
who has access to mining activities, or who has rights of access and withdrawal of
substances. Similarly, the state has the authority to request certain management and
exclusion provisions, such as labour. Under both mining acts, 80% of a company's
workforce must be comprised of Ecuadorian employees. In the 2009 mining act, on the
other hand, artisanal mining is strictly regulated with a chapter for “special regimes''
dedicated to stipulate its rules. To begin with, the 2009 law provides a clear, legal
definition for what constitutes artisanal mining: mining that is carried out through
individual, family or associative work, with the sole purpose of being used as a means
of subsistence. In addition, access to mining for artisanal purposes is restricted to
specific areas designated by the state, and an application process and requirements
have been established in order for the Ministry to grant artisanal miners permits to
conduct their work. Importantly, one of the special restrictions imposed on artisanal
mining is that no foreign capital can finance its operation. Failure to comply with these
rules means that citizens would be engaging in illegal mining, and specific penalties
are accordingly stipulated. These regulations amount to the establishment of exclusion
rights in terms of restricting both the geographical areas and the individuals that can
become artisanal miners. Furthermore, in both mining acts discussed here, the laws
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