Gold Mining in EcuadorSupporting the Matrix Production Change

LOGISTICS TUTORIAL WORK 6 -A

Students:

Jorge Arce Valle

Julio Campoverde

Fernanda Díaz

Jessica Llerena

Dailyn Macías

Adriana Mena

Teacher:MSc. Max Galarza

Gold Mining

• Mining is the economic action, commercial and industrial based on the exploitation and extraction of mineral wealth found in the soil and subsoil, for which purpose there are mines and mining operations.

• In Ecuador there is gold in 228 streams located on the flanks of the Andes. In Esmeraldas, in the tributaries Palabí, San Juan, Mira, Tululbí, Bogota, Cachabi, Santiago, Cayapas, Barbudo, Zapallo, Canandé, Guayllabamba ,Caoní and Blanco, according to the Mining Geological Research Foundation (Fungeomine).

• According to from the Chamber of Mines, in Ecuador there are significant gold mineral reserves (71.667 million ounces).

Gold Mining in Ecuador

ECONOMIC INCOMES

Ecuador's mining sector generated economic incomes to the country since January to December of 2012 total of 11.683.109,20 (4.149.132, 62 represents incomes for gold ) and hired 5.540 employees.

MINING ZONESPROJECT COMPANY MINERAL PRODUCTIO

N

FRUTA DEL NORTE

KINROSS AURELIAN

GOLD AND SILVER

300,000 ounces/Year

MIRADOR ECUACORRIENTE S.A

COPPER AND GOLD

215,000 ounces /year

QUIMSACOCHA

IAMGOLD ECUADOR

GOLD 3000 ounces/DAY

RÍO BLANCO

SAN LUIS MINERALES S.A

GOLD 60,000 ounces/DAY

CONDOR MIRADOR (ZAMORA CHINCHIPE)

Mirador project has copper and gold reserves bordering the 4,500 million ounces.

For the exploitation of mineral, ECSA (ECUACORRIENTE COMPANY) will invest 1,400 million in the first five years and production will start in 2014. It is expected to reach extraction peak two years later.

The gold project is located in the parish of Los Encuentros, Canton , Zamora Chinchipe. This field is expecting to exploit 6.4 million ounces of gold.

The Government of Ecuador and Kinross have been unable to agree on the economics and legal terms to balance the interests of investors.

Canadian company also concluded that there is no interest in the company and investors to promote the development of Fruta del Norte.

FRUTA DEL NORTE (ZAMORA

CHINCHIPE)

The Rio Blanco mining project has a reserve of 991 000 ounces of gold and 4.7 million ounces of silver.Another project that has the Azuay is called Rio Blanco; this project is waiting environmental certification to start its operation.

This mineral deposit is located in the sector Molleturo, 80 kilometers from Cuenca, and it is managed by International Minerals, based in Arizona (USA).The Defenders of the Pachamama Molleturo parish group have established their protest, they said that “the water coming down from the mountains is already contaminated and could be in the future a serious problem for the inhabitants”

RIO BLANCO (AZUAY)

In the parish of Tarquinia, about 15 minutes from Cuenca, it was held in October a referendum that the inhabitants define the future of mining projects, especially the one located at Quimsacocha.

The referendum was held in Tarquinia October 2 with the question that if the public did not want or mining in Quimsacocha. The call was questioned by the Government; from the lack of official endorsement that was criticized.

The referendum attracted over 1000 public in the area, 958 of them decided that there should be no mining since it should bring pollution to waters that reach Cuenca.

Following this referendum, Carlos Pérez, leader of the Tarqui parish, He said that “the results were sent to several international organizations, including the UN, to act and realize the damage that should occur in the environment."

QUIMSACOCHA (AZUAY))

PROJECT COMPANY US $ TOTALMIRADOR ECUACORRIENTE

COMPANY28,448,082.70

FRUTA DEL NORTE

IAMGOLD CORP 22,406,515.00

QUIMSACOCHA IAMGOLD CORP 6,949,026.00

RIO BLANCO INTERNATIONAL MINERALS CORP.

2,144,515.35

METALLIC MINERAL DEPOSITS IN ECUADOR

ADVANTAGES

• Increase in the GDP (Gross Domestic Product)

• Sources of employment

• By running a new mine we can install local capacity, creating jobs, developing local entrepreneurs. The communities become allies of the business rather than its detractors.

• There are many new mining companies working in this project. The community should participate in the co-design project. The company-community relationship is long term and is based on dialogue.

• Understand that caring for the environment and local development are part of the business strategy. It is important the role played by the state in both the approval and supervision of projects and the use of royalties. Are recommended public-private partnerships that enable collaboration in education, environmental protection, social dialogue, land use planning, among others.

DISADVANTAGES

• In illegal mining an important disadvantage is the Increased pollution because there is nobody who regulates and control them.

• The technology that we need to extract gold from the mines have been obsolete and therefore we need foreign help this means that gold mining has a foreign dependence, and also this foreign technology is expensive so this will represent a huge expense for the government.

• Big accidents could happen because we do not have a lot of training people who could execute mining work.

• Most of the raw materials used today come from underground. These are so important in today's economy, because the wealth of countries like Ecuador are natural resources this is how Ecuador support its economy.

• the growth of mining activity, has seen accompanied by the lack of efforts to environmental protection regulations, this led to indiscriminate exploitation, regardless of considerations of depletion of existing resources, this has caused a contamination levels hard to combat and reconstruct.

ILLEGAL MINING

The site of action of illegal mining in Ecuador (northern Amazonia and north coast) reveals proximity to sites of action of Colombian irregular groups that may cross borders to obtain resources for their activities.

NEW MINING LEGISLATION

OLD MINING LAW 

NEW MINING LAW 

Did not exist 

Art.24.-Special mining areas

Art 80.-It is prohibited damage to the flora and fauna, deforestation, erosion and sedimentation in mining activities 

Art 86.-Prohibition of the use of mercury in mining operations

Art 18.-The royalty rate per hectare were between 5-10% 

Art 93.- Fixing a minimum royalty of 5% on sales of primary and secondary mineral and 8% for gold, silver and copper. There are set maximum amounts. It has the small mining royalties pay 3% of sale 

Art 57.-the penalty was one month or three years in prison or a fine of a minimum of 10 and a maximum of 20 unified basic salary depending on the severity of the infraction     

Art 57.-It will be sanctioned by a fine of two hundred to five hundred unified basic salary depending on the severity of the infraction, also will have obligation of restoring the ecosystem and compensate people and communities 

Art 19.-For the development and implementation of mining policy, the Law 126 held that the executed through the Secretary of Mines, National Directorate of Mines and Regional Directorates of Mining. 

Art 5.-The new mining law develops and executes the mining policy, through Sector Ministry, the Agency for Regulation and Control of Mining, National Research Institute of Geology, Mining, Metallurgy, and state mining company 

Art 23.-In the small-scale mining, the Mining Act of 1991 includes the figures of condominium and cooperative miners, and that one of the objectives of the mining administration is provide organizational assistance to the community mining or artisanal mining . 

Art 138 -134.-Legal recognition of artisanal, small mining activities, It incorporates medium mining production volumes. From 301 to 1,000 tons per day for underground mining of 1001-2000 tonnes per day open pit mining. 

The state makes its mining activities through the National Directorate of Geology. 

In the new law mining, the activities are conducted through the National Mining Company 

Was not created

 

Art 12.-Constitution of the national mining company 

NEW MINING LEGISLATION

The ecuadorian economy has been based on the exports of raw material to international markets and at the same time, Ecuador is an importer of

the products based on its own raw material.

Ecuador exports Raw Material

Ecuador imports elaborated products

The lack of technology

and knowledge

Taken from:SECRETARÍA NACIONAL DE PLANIFICACIÓN Y DESARROLLOhttp://www.planificacion.gob.ec/wp-content/uploads/downloads/2013/01/matriz_productiva_WEBtodo.pdf

WHAT IS MATRIX PRODUCTION? The way that society is organized to produce certain goods and services is not limited to purely technical or economic, it also has to do with the whole set of interactions among social actors using the resources they have at their disposal to carry out productive activities. In this assembly, including the products, production processes and social relations resulting from these processes, called productive matrix.

THE MATRIX PRODUCTIVE AND ITS RELATION WITH GOLD MINING ACTIVITY.

The main objective is moving forward to a different economy dependence, where the science, technology, innovation and knowledge allows the country to move from limited resources economy

it means from the production and exports of raw materials to the application of the science to achieve the economy of infinite resources, based on the enforcement of the abilities and knowledge of the most valuable source that Ecuador has which is its people.

CONCLUSION

The economy of Ecuador has been based on the export of oil and raw materials without applying knowledge and technology as a result of this, Ecuador has imported elaborated products that were produced with Ecuadorian raw materials paying high prices for them.This new goal that was proposed for the government of the president Rafael Correa to change the productive matrix involves many sectors and industries which are considered important and also they need the application of knowledge, the use of technology, innovation and instead of intensifying exports, to diversify them.

NETGRAPHY http://www.arcom.gob.ec/

http://www.cme.org.ec/

http://www.arcom.gob.ec/index.php/transparencia/cat_view/128-descargas/127-leyes-y-reglamentos.html

http://www.cme.org.ec/attachments/article/5/Ley%20Org%C3%A1nica%20Reformatoria%20a%20la%20Ley%20de%20Miner%C3%ADa.pdf

http://www.arcom.gob.ec/index.php/component/banners/click/22.html

http://www.telegrafo.com.ec/economia/item/la-reserva-minera-de-ecuador-llega-a-217-000-millones.html

http://www.elcomercio.com.ec/negocios/Kinross-mineria-Ecuador-yacimientos-oro-Zamora-Canada_0_935306663.html