Through Ministerial Agreement No. MAE-MAE 2026-0056-AM, the Ministry of Environment and Energy issued the “Guidelines and Minimum Parameters for the Structuring and Content of Mining Exploitation Agreements in Ecuador” (hereinafter “Instructive”), published in Official Gazette No. 288 of May 20, 2026.
Here are the most relevant aspects:
Purpose and scope of the Instructive
- Mandatory guidelines are established for the structuring, negotiation, approval and execution of mining exploitation contracts.
- Compliance with it is an enabling requirement for the signing of the contract; its non-observance prevents its approval.
- It applies to all contracts and also to negotiation, modification and assignment processes.
Verification and traceability
- A prior comprehensive verification (technical, economic, legal, social and environmental) is required, based on consistency between the feasibility study, the general work plan and investments (PGTI) and financial model.
- Every contract must have a complete administrative file, which guarantees traceability and control.
Nature and Structure of the Contract
- The mining contract is an administrative contract, governed by principles of public interest, sustainability and transparency.
- Mandatory minimum clauses are established, including economic regime, environmental and social obligations, mine closure, dispute settlement and State participation.
Essential elements of the contract
- Area: technical and georeferenced delimitation consistent with the mining cadastre; and state review of mineralogical potential.
- Purpose: temporary delegation for exploitation, without transfer of ownership of natural resources. However, the object does not contemplate that the mining concessionaire will own the mineral resources that it eventually extracts in the exploitation, which is expressly contemplated in Article 41 of the Mining Law, so a contradiction is observed.
- Term: linked to the concession, with differentiation by phases (construction, operation and closure). Signed contracts have a term independent of the term of the concession
- Termination: minimum mandatory grounds and inclusion of post-closing obligations.
Economic regime
- The contract must guarantee a fair and progressive participation of the State.
- Royalties: They cannot be fixed; they must be variable and linked to economic performance. Advance royalties are foreseen as an early payment mechanism. It is included as an obligation and no longer negotiated.
- Economic balance: the contract may establish mechanisms to preserve the economic balance during its term, especially when there are effects on the financial balance that compromise the viability of the project.
- Sovereign adjustment: mechanisms to protect state participation in the face of market changes.
- It requires a prior pronouncement from the Ministry of Economy and Finance on economic clauses.
Technical studies and planning
- A Feasibility Study is mandatory under international standards (CRIRSCO, JORC, NI 43-101, etc.). The main sectoral regulations do not establish as a mandatory requirement the presentation of a Feasibility Study, but of an audited report, in accordance with Article 39 of the Mining Law.
Obligations of the mining concessionaire
- Autonomy in infrastructure and energy (includes energy self-sufficiency).
- Fulfillment of social obligations, community development and local employment.
The obligation to finance and execute social investment and community development programs is established, which will be evaluated by the sectoral authority. It is questionable whether this type of obligation has a legal or constitutional basis, especially because of the impossibility for the State to delegate its obligations to private persons.
- Comprehensive responsibility in environmental management and execution of mine closure plan.
- Implementation of international standards (EITI, Escazú, international good mining practices).
Guarantees, control and sanctions
- Obligation to provide guarantees (compliance, environmental and royalties).
- Permanent control, auditing and inspection regime.
- Mandatory inclusion of penal clauses and sanctioning regime.
Substantial modifications to the operating contract
- It is mandatory to modify the operating contract when there are substantial changes. The instructions establish some changes that must be considered as substantial, where we can find, among others, the following:
- Modification of contract term.
- Modification of the contractual area.
- Incorporation of new minerals. This can be difficult to implement in practice, as it is common for new minerals to be identified in the project (sometimes without economic relevance). It should only refer to the main or secondary minerals.
- Substantial modifications to the PGTI.
- Variation in resource estimation and that affects the useful life of the project.
- Changes to the Feasibility Study that imply substantial changes.
- Assignment of contractual rights.
- When the State requires it in a reasoned manner “in the exercise of its regulatory powers”. This power is difficult to apply, since a State cannot force its counterparts to reform a contract, in the case of bilateral instruments. In addition, the State does not have the “regulatory powers” to reform signed contracts, so this prerogative has no constitutional or legal basis.
- Due to a change of shareholders or administrators of the mining concessionaire. This reason is difficult to apply and has no legal basis, since, on the one hand, it is common for the concessionaires to be companies listed on stock exchanges where the shareholders change permanently; and, on the other hand, the change of administrators (e.g. general manager, president, etc.) is common in every company, especially in long-term contracts, without these changes compromising the obligations of the concessionaire. The change of shareholders does not change the legal entity that signed the contract.
Review of ongoing negotiations and signed exploitation agreements
- Ongoing processes must be progressively adapted to the Instructive.
- Existing exploitation agreements may be reviewed or renegotiated if the State deems it necessary and when technical, economic or public interest circumstances justify it. Such a possibility by the State could violate the principle of legal certainty enshrined in the Constitution of Ecuador and in the same instructions. On the other hand, it is not clear how a concessionaire could be forced to sign an addendum when the contracts are, by nature, bilateral and consensual.
For more information, please do not hesitate to contact us.
This is a summary of legal developments of interest, and therefore cannot be considered as provided advice. If you have any questions, please contact the AVL team.