Ecuadorian Constituent Assembly Decree on Mining - English translation

Friday, April 18, 2008

THE CONSTITUENT NATIONAL ASSEMBLY

CONSIDERING

THAT, by means of a popular consultation on April 15, 2007, the people of Ecuador approved the call to a Constituent Assembly with plenary powers;

THAT, the Constituent Assembly, by virtue of Article 1 of the Constituent Mandate, assumed the effective exercise of those plenary powers;

THAT, the existing mineral substances in the subsoil, in the rivers and lakes, with their beds and shores and in any other part of the national territory are the inalienable and unprescribable property of the Ecuadorian State, and these same substances will be exploited to serve national interests;

THAT, the exploration and exploitation will be conditional on the strict fulfillment of legal obligations, including those concerning the preservation of the environment and the respect for the rights of indigenous people, Afro-Ecuadorians, and communities that are themselves directly or indirectly affected by this activity. It will also be conditional on the payment of patents, royalties, and taxes established in the law;

THAT, it is necessary to reduce potential negative impacts on the environment caused by mining activities;

THAT, the development of mining activity in the country requires a firm and equitable legal framework that standardizes its operations in a coherent form without encouraging speculative activities nor the
concentration of mining concessions in a few legal entities and individuals;

THAT, small-scale, subsistence, artisanal, and aggregate mining is a source of work and income that requires a legal framework and environmental, labour, and social protection.

THAT, it is necessary to promote in the country legitimate mechanisms of territorial ordering, planning and the definition of priorities for the use of the land in the short and long term, as much in the case of renewable resources as in non-renewable resources;

THAT, the current institutional legal framework is insufficient and does not respond to national interests - which is why it is urgently necessary to correct it and to restrain the environmental, social and cultural liabilities until a new Mining Law, with safe and efficient regulations, according to the model of development desired by the country, comes into force;

In the exercise of its duties, it resolves to issue the following:

CONSTITUENT DECREE

Art. 1. - Declares the extinction without any economic compensation of all mining concessions in the exploration phase that have not made any investment in the development of the project by December 31, 2007 or that have not presented their respective studies of environmental impact, including those that are awaiting administrative resolution.

Art. 2. - Declares the expiration of mining concessions that have not paid the conservation fees in the time established in the Mining Law, that is to say by March 31 of every year and in advance as of 2004.

Art. 3. - Declares the extinction without any economic compensation of mining concessions granted within protected natural areas, protected forests, and buffer zones defined by the competent authority, and those that affect springs and sources of water.

Art. 4. - Declares the extinction without any economic compensation of mining concessions which have been granted in numbers greater than three to a single natural person (individual) or his/her partner; or
legal entities and their related companies, be it through the direct participation of the legal entity or its shareholders and his/her relatives to the fourth degree of consanguinity and the second degree of affinity.

Non-metallic mining concessions that are under exploitation are excluded.

Art. 5. - Declares the extinction without any economic compensation of all mining concessions granted to public officials and former officials of the Ministry of Natural Resources, the Ministry of Energy and Mines, and the Ministry of Mines and Petroleum, or to their immediate relatives, within the fourth degree of consanguinity and the second of affinity, due to the use of privileged information in their personal interest. Similarly, expiration is ordered for the concessions which at the moment are held by third parties, and which are the product of the transference of concessions initially granted to public officials and former public officials of the Ministry of Natural Resources, the Ministry of Energy and Mines, and the Ministry
of Mines and Petroleum, or their immediate relatives, up to the fourth degree of consanguinity and the second of affinity.

Art. 6. - Declares a moratorium on the granting of new concessions from the moment of the approval of the present decree up until the new constitutional and legal framework comes into force. Consequently, the National Government is ordered, through the Ministry of Mines and Petroleum, to shelve the pending procedures for the resolution of requests for new mining areas. The Ministry of Finances is ordered to transfer the necessary resources in order that the fees paid for processing rights be returned to the applicants.

Art. 7. - The holders of concessions for non-metal mining and construction materials that do not fall within the cases described in articles 1, 2, 3, 4, and 5 of the present decree, shall continue their activities, but they are obliged to renegotiate their titles according to the new legal framework that regulates the activity.

The State, as the owner of mineral resources, has the preferential right to take free advantage of construction materials, fulfilling environmental and other regulations that are dictated for this purpose by the Ministry of Mines and Petroleum.

Art. 8. - The activities of all metal mining concessions that do not fall within the cases described in articles 1, 2, 3, 4, and 5 remain suspended until the new legal framework that regulates the activity and redefines the conditions of operation is approved.

Only and exclusively metal mining concessions that at this date are in production and that do not fall within the first item of this article shall continue their activities, but they are obliged to renegotiate their titles under the conditions of the new legal framework.

Art. 9. - The new legal framework which is mentioned in the present decree shall have to be drawn up within a term of 180 days counted from the date of promulgation of the present decree.

Art. 10. - The concessions of small-scale mining, artisanal mining, subsistence mining, mining concessions in which there are properly legalized mining cooperatives, associations, and joint ownerships shall continue their activities, except those which fall within that which is indicated in article 3 of the present mandate.

Without prejudice to the above subsection, no individual or legal holder of mining rights for small-scale mining, artisanal mining, and subsistence mining will be able to possess individual mining titles or combined titles which exceed 150 mining hectares in production or which have a volume of production of more than 150 tonnes a day.

Art. 11. - The National Government, through the Ministry of Mines and Petroleum, will establish the National Mining Company, which will take part in all phases of activity under conditions of environmental
protection and respect for the rights of the people.

Art 12. - The provisions contained in the present constituent decree are of obligatory observance. For this reason this decree will not be subject to complaints, challenges, action for legal protection, demands, protest, recourse or any administrative or legal action. Neither will it give rise to any compensation.

FINAL PROVISIONS

FIRST: Notify the Ministry of Mines and Petroleum, ordering that it comply with the regulatory administrative acts for the strict enforcement of the present decree.

SECOND: Prepare the Ministry of Mines and Petroleum to establish the necessary regulations for the exploitation of rock salt (sodium chloride) in coordination with the Ministries of Health and Environment, taking care to safeguard the principles of public health and environmental protection.

THIRD: If the term anticipated in article 9 lapses and the new legal framework regulating mining activity has not been promulgated, the Ministry of Mines and Petroleum will renegotiate the titles of the mining concessions referred to in article 8 in accordance with constitutional principles.

FOURTH: The present decree will enter into force as of the present date.

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