Mining Environment & Taxes
Since early 2015, Ecuador and its government have focused on reenergizing their mining industry after a period of decline and diminishing investment in the sector.
Ecuador, which is blessed with a rich geological endowment including large oil and gas reserves and gold and copper deposits in a variety of geological settings, has restructured its tax and mining policies to encourage foreign investment.
In the past year, the Government of Ecuador has accomplished the following:
- Hired Wood Mackenzie, a US-based international consulting firm, to advise on and recommend changes to the tax code, making Ecuador competitive with its regional neighbours in Latin America.
- Created a Ministry of Mines to focus on development of the mining industry
- Established three classes of mining categories, Small, Medium and Large
- Phasing in refundable VAT on capex and opex costs, adding up to 2% to a project’s IRR
- Accelerated depreciation of 5-10 years
- Fiscal stability contracts
- Incentives for foreign investment in small mining category
- Invested in hydro power which generates some of the lowest power costs in all of Latin America