What company is behind the ambitious construction of the Cascabel copper mine?

What company is behind the ambitious construction of the Cascabel copper mine?
What company is behind the ambitious construction of the Cascabel copper mine?

The Cascabel mining project, which has proven reserves of 3.2 million tons of copper, will be the third large-scale mine in Ecuador.

The Cascabel mining concessionwhere the largest is planned to be built underground copper mine of Ecuador and one of the largest in South America, it has an area of 4,979 hectareswhich is equivalent to almost 82 times the La Carolina park in Quito.

It is a land located in Ibarra (Imbabura), in the north of the country. After almost eight years of exploration, it is projected that from there it will be possible to extract copper from 2030 to 2051.

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The reserves proven so far are at minus 3.2 million tons of copperthe main material of the project, but also estimated 9.4 million ounces of gold and 28 million ounces of silver.

But which company will be charge of the ambitious project which, if completed, would be the third large-scale mine in Ecuador? The signature is SolGold, a mining giant based in Brisbane, Australia.

Since 2019, they have been operating in the country two large scale mines:

  1. The underground mine Gold Fruit of the North (Aurelian Ecuador, subsidiary of the Canadian Lundin Gold).
  2. and the mine open pit copper lookout (Ecuacorriente, subsidiary of the Chinese consortium CRCC-Tongguan).

Both are located in the Amazonian province of Zamora Chinchipe. Thanks to its operations, in 2023, the mining was the third sector of Ecuador’s non-oil exports.

So, SolGold it would be the third company to operate mining large scale in Ecuador.

An Australian giant with interest in Ecuador

With the signature of exploitation contracton June 5, 2024, it was established that the Australian SolGold will be able to extract copper of this territory located exactly in two parishes of Ibarra, Lita and La Carolinawhere some live 7,000 people.

He exploitation contract with SolGold you will have a duration of 33 yearsbut the useful life of the mine can be between 75 and 100 years.

SolGoldwith a heritage of USD 313 million until June 2023is a company listed on the London and Toronto stock exchangesso your shares are sold in the markets.

Hence the company is composed of several shareholdersof which the largest are the Australian mining giant BHP Billiton and the American Newmont Mining Corporation (which also bought the Newcrest mining company in 2023). Together, these companies have almost the 20% of the share package by SolGold.

The Chinese company follows Jiangxiwhich since November 2022 has the 6.3% of SolGold shares.

Thus, the firm foresees allocate USD 4.2 billion to the construction of this subterranean minea figure higher than what it cost to build the largest hydroelectric plant in Ecuador, Coke Elbow Sinclair, who required an investment of USD 2,763 million.

SolGold also hopes to mark a industry milestone being the first mine that will have a metal transportation pipeline instead of using trucks by land.

He mine pipeline of 150 kilometers will go from Ibarra to the port of Esmeraldasfrom where it is expected export copper, gold and silver to Asia and Europe.

However, the mining company still requires an environmental license of the Ministry of the branch to begin build the mine in Cascabel, clarifies Luis Mario Sánchez, vice president of SolGold.

For the company to receive the license, it is also key that the Ministry carries out an environmental consultation in the communities where the project is located.

It’s about a participation process which in other projects has caused strong protests by anti-mining groupsas in Palo Quemado (Cotopaxi), for the La Plata mining project.

SolGold makes its way in the north of the country

But the name of this company, one of the largest mining companies in the worldis on the map of concessions in Ecuador not only because Jingle Bellwhere until now it has invested USD 300 million in the exploration stage.

SolGold also has other 89 mining concessions in Ecuadoralthough Cascabel is the only one where the company has already advanced to the exploitation stage.

The Australian made concessions by the state between 2012 and 2017.

Then, in 2018, the mining cadastre was closed for new awards in the Government of Lenín Moreno. Since then, the presidents Guillermo Lasso and Daniel Noboa have offered reopen the awardsbut that has not happened.

Sánchez explains that, of the 90 concessions that SolGold hasthe majority is in the northern Ecuador, and adds that there is 12 that are priorities for now for the company, in addition to Cascabel.

Among those he mentions Yellow River, Espejo and Magdalenagold concessions also located in Imbaburaand Futurea copper concession located in the south, in Zamora Chinchipe.

This last concession, Sánchez adds, is where the most progress has been made in exploration, after Cascabel. However, he clarifies that company has not yet carried out studies economic preliminaries or prefeasibility or for the establishment of resources, “but They are interesting projects“he adds.

And recognize that it is a challenge to develop miningby the long processes exploration.

“We have been advancing in exploration in some projects, but everything depends on the permits and also on access, because some places that are very remoteothers have less geological interest and in others there are social problems“, Add.

The company went through a scandal in Ecuador

The SolGold operations in Ecuador they are carried out through two subsidiary companies of the Australian, which were incorporated in the country:

  1. SolGold SA., established in 2018, whose main objective is the provision of specialized technical services of administrative, financial, accounting support and specialized technicians for the mining industry, and in the land ownership for the mining operations of its related company Exploraciones Novomining SA
  2. Explorations Novomining SA., established in 2006, whose main objective is mining activity, which includes the prospecting exploration, exploitation, benefitsmelting, refining and industrialization of metallic and non-metallic minerals, metals and materials for the construction industry.

But SolGold previously went through an embezzlement scandal of funds that involved the offices in Ecuador, which was uncovered in 2022.

The SolGold Board of Directors found that between 2017 and 2021 there was a embezzlement of funds for USD 4.6 million in the subsidiary of Ecuador.

The signature EY auditor was the one who led the forensic investigation in the Quito offices, and found that at least USD 4.6 million were embezzled through registration and capitalization of false expenses.

The embezzlement of funds “resulted from the overestimation of our exploratory assets (in Ecuador, ed.) and its associated false expenses,” the report says.

After the scandal, the company began a restructuring in Ecuador and changed managers.

 
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