By means of Executive Decree No. 273 of December 31, 2025 (hereinafter the “Executive Decree“), the General Regulations of the Mining Law (hereinafter the “Regulation“) were amended. The following are the main reforms introduced.
- Bids in auctions
The requirements for submitting bids mining auctions are simplified. The Regulation no longer requires financial collateral or its risk rating; instead, the Sectoral Ministry will establish additional requirements through an instructive. The Sectoral Ministry will define additional requirements through the corresponding instructive.
- Inclusion of mining project concept
The concept “mining project” includes the area of one or more contiguous mining concessions of the same holder, whose purpose is to carry out mining activities in a deposit; and that, for technical, operational and characteristics of the mineral deposit, they carry out the mining operations together. It is clarified that the mining project cannot have more than 5000 hectares in exploitation.
- Start of initial exploration period or simultaneous activities
The mining holder has 60 days from the granting of the concession to initiate the procedures of the previous administrative acts. Then, in 5 days the concessionaire must present to the Ministry with proof of having initiated such procedures. If not, the initial period (4 years) will automatically begin at the end of 60 days. When the concessionaire obtains the previous acts, must request the formal declaration of the beginning of the term.
If there are delays due to the fault of the holder (lack of requirements, corrections, etc.), the period will be counted from 60 days after the granting of the mining title. Applies to all mining regimes and phases.
- Change to Advance Exploration
The mining title holder who needs to change to advanced exploration must request it at least 60 days before the end of the initial exploration period. The application must include: i. partial waiver of the original area of the concession (which will be processed independently); ii. Compliance with minimum activities and investments; in auctions, also the amounts committed; and, iii. Audited Final Initial Exploration Report, in accordance with the technical guidelines of the Mining Regulation and Control Agency.
Once the requirements have been met or the requirements of the authority have been corrected, the administrative resolution will be issued accepting the change from the initial exploration period to advanced exploration.
The beginning of the term for the advanced exploration period will run from the issuance of the resolution declaring the beginning of the term for the advanced exploration period. This administrative resolution may only be issued when the corresponding environmental authorization is obtained. If the holder does not request environmental authorization prior to the expiration of the initial exploration period or there are delays due to its responsibility (lack of requirements, corrections, etc.), the term of the advanced exploration period will begin 60 days after the resolution approving the change of period.
5. Negotiation of mining exploitation agreement
The mining owner who requests the pre-contractual negotiation of the mining exploitation agreement during the economic evaluation period must submit the following documents:
- Certified Copies of Previous Administrative Acts.
- Feasibility Report of the Mining Project, duly signed by the Qualified Person QP, who complies with a standard format accepted by the International Committee on Standards for Reporting Mineral Resources and Reserves, CRIRSCO; the SAMREC code; or other similar or superior ones, in Spanish and that are not more than 36 months old prior to their presentation.
The Ministry may review, modify or renegotiate terms and conditions at any stage of the negotiation prior to the mining contract, to protect the interests of the State and align them with current regulations and public policies.
6. Change to the exploitation phase in large-scale mining
Once the final act of pre-contractual negotiation has been approved, the concessionaire must request the Ministry to declare the start of exploitation, presenting:
- Audited report confirming payment of royalties, patents and compliance with minimum investments.
- Feasibility report signed by qualified professionals (QP), under international standards (CRIRSCO, SAMREC), valid for a maximum of 36 months.
- Partial renunciation if the area exceeds 5,000 hectares.
7. Change to exploitation phase in medium-sized mining
Within 90 days prior to the expiration of the period of economic evaluation of the deposit or its extension, the mining concessionaire must request the Sectoral Ministry to move to the exploitation phase of the mining concession and must attach:
- Audited report confirming payment of royalties, patents and compliance with minimum investments.
- Feasibility report signed by qualified professionals (QP), under international standards (CRIRSCO, SAMREC), valid for a maximum of 36 months.
- Partial renunciation if the area exceeds 5,000 hectares.
8. Changes in the calculation of the tax base for metal mining royalties
The Executive Decree introduces a differentiation by type of metallic mineral (gold/silver, and other metallic minerals). In gold and silver it is calculated on Gross Income, without deduction of expenses. For other metallic minerals, the previous scheme (effective net income) is maintained, with deductions according to the regime: i. Small and medium-sized mining: beneficiation, refining and transportation; ii. Large-scale mining: refining and transportation.
Additionally, the formula for the calculation of mining royalties for medium and large mining is included, establishing price thresholds and applicable percentages of mining royalties between 3% and 8%.
9. Distribution of mining profits and royalties
60% of mining profits and royalties must be allocated to social projects and territorial development through the GADs in the area of influence (45% provincial, 35% municipal, 20% parish). Prior to the disbursement of the money resulting from mining profits and royalties, the GADs must present and register with the Sectoral Ministry a detail of the prioritized social investment and territorial development projects, so that the Sectoral Ministry may or may not approve the project, without prejudice to the control actions carried out by the Office of the Comptroller General of the State.
10. Change in sovereign adjustment calculation
For the calculation of sovereign adjustment, it must be done taking into account the investments made during the term of the mining exploitation agreement, not during the entire term of the mining concession, in this way the Executive Decree discards the investments made during the exploration phase and the benefits of the State during those years. In addition, it is clarified that the payment of the sovereign adjustment is not deductible for income tax. In addition, the formulas for calculating benefits of the Ecuadorian State and the Applicable Sovereign Adjustment Rate are reformed.
11. Fines for invasion of concessions
A fine of up to 300 UBI is established for persons who invade on mining concessions and conduct operations within or outside such concessions.
12. Inspections on illegal mining
It is specified that the inspections and operations are part of the control and action prior to sanctions of ARCOM, carried out by designated public servants and with the support of the National Police.
The material seized in these inspections will be used as self-management resources of the National Mining Company EP, which will finance the operation with its revenues. The Board of Directors of ARCOM shall issue the regulations for the auction of machinery, equipment and other goods used in illegal activities.
13. Changes in administrative amparo proceedings
It specifies that the administrative amparo also proceeds against disturbances, acts or facts of authorities that act without competence.
In addition, if the identity of the accused is unknown, the complainant must submit a statement in which he declares that he does not know the identity of the alleged disturbers.
Once the process has begun, it will not be necessary for the ARCOM to send the petition for amparo to the offenders. ARCOM can order the immediate seizure of machinery, equipment and extracted ore.
The request for administrative protection and denunciation of illegal activities is a right, but also an obligation of the mining concessionaire. The absence of amparo or complaint will be understood as tacit authorization of the mining concessionaire, so it will be responsible for the environmental effects. Petitions for protection or complaints release the mining concessionaire from environmental responsibility.
14. Implementation of its own electricity generation system
The mining concessionaire undertakes to implement an electricity generation system with sufficient capacity to supply its entire electricity demand.
15. Registration for commercialization of minerals with the UAFE
Mining concessionaires, as an additional and enabling requirement prior to the commercialization of minerals, must make a mandatory registration with the UAFE and present it to the Sectoral Ministry. Without the registration, they will not be able to carry out mineral commercialization activities.
16. Extinction of mining rights of concessions in small-scale mining
The mining concessionaire must start small-scale mining activities immediately and without delay once the previous administrative acts have been obtained. ARCOM will periodically verify compliance. If in 4 years it does not obtain the previous acts for reasons attributable to the title mining holder or does not start activities, the mining concession will be automatically extinguished and will revert to the State without compensation.
In addition, after obtaining the previous acts, the concessionaire must request the start of activities in 30 days; If it does not request the start of activities within 4 years of the registration of the mining title, the concession will be declared extinguished by operation of law.
17. Sovereign adjustment for current mining agreements
With respect to mining exploitation agreements signed prior to the publication of the Executive Decree, the calculation of the sovereign adjustment will be carried out in accordance with the regulations in force at the time of the generation of the corresponding obligation, taking into account the technical clarifications made in the Executive Decree. In addition, it is provided ex officio that the rate applicable for the updating of State revenues and the free cash flows of the mining concessionaire at the value of the year of calculation is the one in force at the time of the generation of the corresponding obligation, in accordance with the formula introduced in the first transitory provision of the Executive Decree.
For more information, please do not hesitate to contact us.
This bulletin contains 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.