The successive discontinuances of investment arbitration proceedings between Chile’s state-owned company, Chilean Copper National Corporation (Codelco in Spanish), and Ecuador before the International Center for the Settlement of Investment Disputes (CIADI) to negotiate an amicable settlement of the dispute appear to be bearing fruit. Ecuadorian Government sources have confirmed to the media that both parties are considering hiring an international expert to assess Llurimagua’s resources and form a joint venture to develop the project.
Five months after the Chilean company filed arbitration proceedings with CIADI, the Ecuadorian National Mining Company (Enami EP) and Codelco began conversations to reach an agreement. Llurimagua mining project, which has led to two international arbitration proceedings in the last two years.
The Chilean company accuses Enami of failing to comply with the agreements to establish a company for the project’s development, among other things. Chile and Ecuador entered into a framework agreement for mining exploration in 2008, paving the way for a series of agreements that culminated in 2019 when Codelco and Enami agreed on the association’s final terms. According to a November 2020 Codelco press release, Enami had not complied with the agreement of “creating a society for the development of the project or ratifying the shareholder agreement agreed one year ago, and carrying obligations from 2016.”
This situation prompted Codelco to initiate two investment arbitrations against Ecuador: one with the International Chamber of Commerce (ICC) Arbitration Court in April 2021 and another with CIADI in January 2022.
According to recent media statements by Ecuador’s Minister of Energy and Mining, Fernando Santos, both parties are “in very good spirits” and “have the intention to reach an agreement.” They also seem to be in agreement on the next move of hiring an international expert to value Llurimagua‘s resources, determine each company’s participation, and finally set up the association. (see “Ecuador y Chile avanzan en negociaciones de proyecto cuprífero de US$3.000mn Llurimagua“, bnamericas, 30.01.2023).
Cotacachu-Catapas Ecological Reserve
Llurimagua is located in a buffer zone of one of the world’s most protected zones: the Cotacachu Catapas Ecological Reserve.
In this zone, the brown-headed spider monkey and other endangered endemic species have found refuge against their extinction. It is one of the most important Andean reserves, and its biodiversity is threatened not only by this project but also by other mining projects. A new frog species was discovered in the area recently and named Resistance Rocket Frog to symbolise the fight against the mining operations.
The documentary “Bajo suelos ricos” portrays the reticence of local communities and ecologist groups related to a project viewed as a fatal threat to a protected zone and endangered species habitat (see movie trailer: “Under Rich Earth“).