A view of Bartolome Island. Image Credit: CIA Factbook
Article updated on 26/02/20 by Reginald Davey
Ecuador is a country in western South America that borders the Pacific Ocean at the Equator. It has an area of 283,561km2 and its total population is 16,498,502 according to 2018 estimates. Along the coast and in the Amazonian jungle lowlands the climate is tropical and cooler at higher elevations.
The national flag of Ecuador. Image Credit: CIA Factbook
Decades of political instability has left Ecuador battered and impoverished. The economy of Ecuador is largely dependent on its petroleum resources, which represented 29% of its total exports of $19.3bn in 2017. The GDP of Ecuador is $193bn as per 2017 estimates. Due to the global recession and other factors, the economic growth rate of the country slowed down to 0.4% in 2009. In 2016 the economy showed a GDP contraction of -1.2%, which had recovered to 2.4% in 2017.
Overview of Resources
Ecuador is rich in natural resources such as gold, silver, and crude petroleum. Despite having rich reserves of base and precious metals, Ecuador is not a key producer of mineral commodities.
The country is the fifth-largest producer of petroleum products in South America and Central America. It is also a member of Organization of the Petroleum Exporting Countries (OPEC). Most of the petroleum produced by this South American country is in its Amazonian eastern region, with the most productive oil blocks in the northeastern region.
Though not as abundant as the reserves of petroleum, gold and silver are the major metals mined in Ecuador. The 5,000ha Fruta Del Norte Gold Project, located 9km south-west of the village of San Antonio and fully owned by Lundin Gold, is estimated to contain probable mineral reserves of 15.5Mt as of May 2017. Construction started in mid-2017 and the first production was achieved in November 2019. It is estimated that the project has a mine life of approximately 15 years. Apart from gold, the mine complex also contains deposits of silver.
Another important gold mine in Ecuador is the Zaruma mine, which has produced over 5 million ounces of gold historically. Core Gold management took over operations at the mine in 2016 and has been investing in a more efficient mine plan.
Cascabel, a rich mine located in northern Ecuador, has been estimated to last between 44 and 65 years, with 2.4 billion tons of minerals and natural resources. With abundant deposits of gold, silver, and copper, Cascabel has the potential to become the largest underground silver mine in the world.
Ecuador has abundant reserves of crude petroleum. The total amount of crude petroleum exported by the country in 2017 was 3bn barrels. The pipeline infrastructure in Ecuador is aging, which presents serious challenges to this nation which relies heavily on exports of crude and refined petroleum.
Santa Cruz Island's beach located at Dragon Hill. Image Credit: CIA Factbook
The Tambococha-Tiputini fields have been estimated to hold half of Ecuador’s total oil, and Ishipingo, the third field, holds the other half. In September 2016, approximately 30,000 barrels per day was added to oil production by Petroamazonas at their Tiputini field. Drilling at Ishipingo began in 2018. The Ishipingo-Tambococha-Tituptini fields are estimated to hit peak production of 300,000 barrels per day in the next couple of years. Oil reserves are estimated at 4bn barrels.
Ecuador has been looking toward the future by investing heavily in the mining industry. Since attracting foreign investors by changing the application of sovereign adjustment, the mining industry in Ecuador has been improving. Future investments by the Ecuadorian government are set to reach US$1bn per year over the next five years. The industry in this Latin American nation is predicted to reach US$7.9bn by 2021.
With the continuing support of companies, primarily from Canada and China, and the application of new legislation by the Ecuadorian government, the mining sector will likely continue to be strong and propel economic development in the coming years.
Disclaimer: The author of this article does not imply any investment recommendation and some content is speculative in nature. The author is not affiliated in any way with any companies mentioned and all statistical information is publically available.
References and Further Reading