Here’s your explainer on mining in Ecuador, with Dundee / Loma Larga folded in.
1. Big picture: where mining fits in Ecuador’s economy
Ecuador has large deposits of copper, gold and silver, similar in potential to Peru and Chile, but it is still a latecomer to large-scale mining. For decades, the extractive sector was basically oil + small-scale gold mining. Now metals are growing:
- Mining exports were a bit over USD 3 billion in 2023, about 9% of total exports, making mining the fourth export sector after oil and a few agro-exports. (Trade.gov)
- Overall extractive industries (oil + mining) have provided about 9% of GDP, 27% of government revenue and 44% of exports in recent years. Mining is still a minority inside that, but rising as new projects start up. (EITI)
- Only two large-scale metal mines (Fruta del Norte and Mirador) are fully operating. Most other projects are stuck in legal disputes, local resistance or early stages. (IDB Publications)
At the same time, illegal mining, especially gold, has exploded in parts of the Amazon and the Andes. It brings money into poor regions, but also pollution, violence and organized crime. (Global Initiative)
So Ecuador is trying to walk a tightrope:
- Use legal mining to bring in jobs, taxes and foreign exchange,
- While controlling or shutting down illegal mining,
- And responding to strong local movements that defend water sources, páramos and Indigenous territories.
2. Legal mining – the “pluses”
National level
1. Exports and foreign exchange
- Mining exports (mostly gold and copper) now bring in billions of dollars a year and are seen as a way to diversify away from oil. (Trade.gov)
- For a dollarized country like Ecuador, export sectors are crucial because they bring in the dollars needed to pay for imports and debt.
2. Government revenue
- The extractive sector (including mining) generates royalties, income tax, and other fees. In 2020, extractives were 27% of government income, with mining’s share expected to grow as more projects mature. (EITI)
- New regulations and inspection fees have been introduced to finance better oversight and crack down on illegal operations. (Discovery Alert)
3. Investment and infrastructure
- Large mines require roads, power lines, camps, ports and services. Some of that infrastructure later benefits nearby communities and can support other economic activities.
- Projects like Fruta del Norte in Zamora-Chinchipe have brought local jobs and higher incomes in surrounding towns, according to impact studies. (IDB Publications)
Local and regional level
- In remote rural areas with few alternatives, legal mining can mean:
- Direct jobs (skilled and unskilled),
- Indirect jobs in transport, food, lodging and services,
- Funds for local development projects through royalties and “obras por impuestos”–style schemes.
However, these gains are not automatic: they depend on good local agreements and on whether royalties actually reach the canton or parish budget.
3. Legal mining – the “minuses”
Environmental impacts
- Large open-pit or underground mines can affect water quality, river flows, soils and biodiversity, especially in sensitive ecosystems like páramos and cloud forests.
- Regions such as Intag in Imbabura and Azuay’s highlands have become symbols of resistance, where communities argue that mining threatens water sources, agriculture and ecotourism. (flacso.edu.ec)
Social conflict and trust issues
- Many communities feel that projects were approved with weak consultation, especially Indigenous peoples and rural communities.
- Even when companies offer jobs and social projects, residents worry that:
- Benefits will be short-term,
- Environmental damage will be long-term, and
- The main winners will be national elites and foreign investors, not local people.
Legal uncertainty
- Ecuador has a history of court rulings and local referendums that stop or delay projects after companies have already invested. This makes investors nervous and slows down new formal projects. (IDB Publications)
This mix of rich resources + social resistance + legal uncertainty is exactly what you see in the Dundee / Loma Larga case.
4. Illegal mining – a parallel economy
While formal mining advances slowly, illegal and informal gold mining has grown very fast:
- In the Amazon, at least 7,490 hectares have been affected by illegal mining, especially gold mining, with rapid expansion in places like Napo. (Debates Indígenas)
- Reports describe how criminal groups have captured parts of the artisanal and small-scale gold mining (ASGM) sector and use it to launder money and export “dirty gold” through legal channels. (Global Initiative)
- Illegal mining is now tied to organized crime, including some of the same gangs involved in drug trafficking, such as networks linked to Los Lobos and allied cartels. (Amazon Watch)
Economic “plus” (for some)
At local level, illegal mining can bring:
- Quick cash income for people with few alternatives,
- An informal service economy (shops, bars, transport),
- Cash that moves through local markets.
But this “boom” is usually short-term and chaotic, and most profits go to middlemen and criminal groups, not to the community.
Economic and social “minus”
- No taxes or royalties for the State.
- Environmental damage: mercury and cyanide pollution, deforestation, river destruction, which then hurt farming, fishing and clean water. (Debates Indígenas)
- Violence and lawlessness: conflicts between groups, forced labor, child labor, and threats against Indigenous leaders and environmental defenders. (Amazon Frontlines)
Authorities have started to react:
- Reopening the mining cadastre so small formal projects can get permits instead of going illegal. (Reuters)
- Increasing inspection fees and controls to fund supervision and combat illegal mining.
- Working with UNODC and regional partners on organized crime linked to illegal mining. (UNODC)
5. Case study: Dundee Precious Metals / Loma Larga (Azuay)
The Loma Larga project (gold-copper-silver) in Azuay, owned by Canadian company Dundee Precious Metals / DPM Metals, has become one of Ecuador’s most controversial mining projects.
What the project promised
- Investment of about USD 419 million for an underground mine in the Quimsacocha / Kimsakocha páramo area.
- Hundreds of direct jobs and significant royalties and taxes over the mine life. (mining-technology.com)
Why there is so much opposition
- The project sits near the Quimsacocha water reserve, which supplies drinking water and irrigation to Cuenca and surrounding communities.
- Local residents, Indigenous groups and urban sectors fear contamination and reduced water availability from any major mining project in the páramo.
- In September 2025, more than 100,000 people marched in Cuenca calling for the environmental license to be revoked and for “Kimsakocha without mining.” (Reuters)
What the government did
- The Noboa government initially granted an environmental license, but later:
- Suspended the license while asking for more environmental planning, and then
- Revoked the license in October 2025, citing technical reports from local water authorities and the need to protect water and public health. (Reuters)
- Only two large metal mines are operating in Ecuador; Loma Larga was meant to be one of the next big projects. Its suspension shows how difficult it is to move forward with mining in areas where water is seen as non-negotiable. (Reuters)
DPM has said it is evaluating “all legal options,” and NGOs are pressuring the company to walk away rather than take Ecuador to international arbitration. (MINING.COM)
6. So… is mining “good” or “bad” for Ecuador’s economy?
It’s really both, depending on how it is done and where.
National level
Pluses:
- Mining can help stabilize external accounts, support the dollarized economy, and reduce reliance on oil. (EITI)
- Properly taxed, it can fund education, health, infrastructure—if governance is strong.
Minuses:
- If governance is weak, mining can become another source of corruption and capture.
- Conflict around projects like Loma Larga can scare away long-term investment, slowing growth. (Reuters)
Regional and local level
Pluses (legal mining):
- More jobs and income in remote areas.
- Better roads, electricity, communications.
- Local businesses (transport, food, lodging, services) can grow.
Minuses (especially illegal or poorly regulated mining):
- Damage to water, soils and ecosystems that support agriculture, livestock and tourism.
- More violence, money laundering and social fragmentation. (Global Initiative)
In short, mining can be an engine of development or a source of long-term damage, depending on:
- Where it is allowed (for example, avoiding key water sources and high-risk ecosystems),
- How communities are consulted and compensated,
- How well illegal mining and organized crime are controlled, and
- How transparently revenues are managed at national, provincial and cantonal level.
Short bilingual wrap-up
EN (very short):
Mining in Ecuador brings dollars, jobs and tax income, but also conflict, pollution and links to organized crime when it is badly regulated or illegal. Projects like Loma Larga show the tension between using mineral wealth and protecting water and páramo ecosystems, especially at the local level.
ES (muy corto):
La minería en Ecuador genera divisas, empleo e impuestos, pero también conflictos, contaminación y vínculos con el crimen organizado cuando está mal regulada o es ilegal. Proyectos como Loma Larga reflejan la tensión entre aprovechar la riqueza mineral y proteger el agua y los páramos, sobre todo en el ámbito local.
