Reactivation, construction and clean energy leverage the world price of copper; Ecuador sees an opportunity

The Ministry of Energy analyzes three possible scenarios for the price of copper. The optimist places it at $4.60 per pound.

The economic reactivation, the rebound in power construction and new clean energy projects worldwide are the main factors that lead copper to a period of high prices.At the moment, the Ministry of Energy and Non-Renewable Natural Products managesthree possible price scenarios for 2021: $3.66 per pound; trend, $4.13 per pound; and the optimistic, $4.60 per pound.

This price is very favorable, considering that it has returned to the maximum levels recorded in 2011, and is well above the minimum historical values, which in January 1999 was $0.65 per pound.

María Eulalia Silva, executive president of the Chamber of Mining of Ecuador, explains that, after the pandemic paralyzed several activities,There is a good outlook for vaccination, because the various sectors are preparing to work at full speed.This means greater electricity consumption, and this, in turn, greater demand for copper.

According to Silva, China is one of the largest consumers of copper and its construction activity is picking up. But also, the world is dedicated to the adoption of clean energy; There are, for example, dates for the replacement of the vehicle fleet so that it is electric.Copper is key to the infrastructure, food chain, transportation, technological and medical devices industries.

For Ecuador, Having a valuable mining resource, says Silva, is an opportunity that must be taken advantage of. He explained that we have two large-scale mines (Fruta del Norte, gold; and Mirador, copper) producing in the south of the country. Mirador, with 3.12 million tons of copper, already exploits the mineral and exports copper concentrate. Additionally, there are second generation mines that are also copper mines and that can generate income.

TheAgency for the Regulation and Control of Energy and Non-Renewable Natural Resources (ARC)reported that it granted, for the Mirador mine,fifteen export certificates with a commercial value of $300 million, for the sale of more than 190,000 tons of copper concentrate.

Likewise, for small mining, the ARC delivered 180 export certificates worth $42.57 million, for the marketing of 26,000 tons of concentrate of this same metal.

In the coming years, the country will have new world-class minesthat will produce more copper concentrate, such as Loma Larga (Azuay), which plans to start production in 2023; also Cascabel and Llurimagua, both located in Imbabura, says the Ministry.

The mining resources that are obtained by private companies are transformed into income for the treasury, both in taxes (income, VAT) and in royalties and mining profits. According to information published on the SRI institutional website, the mining sector generated $430 million for the Ecuadorian State in 2020. But this value considers taxes generated in fiscal year 2019; Those for 2020 will be known in March (royalties) and in April (tributes).

Silva explained that, in addition to taxes, the country benefited from $374 million in foreign direct investment.

Silva said that, despite the pandemic, mining exports grew significantly in 2020, and that for 2021 an increase in exports of at least 50% is estimated.

With the production and marketing of minerals, plus the start of operations of new mines and the rise in raw material prices,Ecuador will be able to meet its export projections, which, in a trend scenario, will reach $62,511 million until 2030.said the Ministry.