Ecuador's Power Shortages Delay Copper Expansion Deal with Chinese Miner

Ecuador's efforts to expand its copper mining operations have hit a significant roadblock due to ongoing power supply issues. The country's energy deficit has delayed the signing of a crucial contract extension with Chinese mining company Ecsa-Ecuacorriente, which is poised to open a second copper pit in the Mirador Norte deposit. The delay underscores the challenges facing Ecuador as it seeks to bolster its mining sector, which is a key component of its economic development strategy.

Ecsa, a subsidiary of the Chinese consortium CRCC-Tongguan, has been operating the Mirador mine—the only large-scale copper mine in Ecuador—since June 2019. The mine currently processes around 60,000 metric tons of mineralized material per day. The Ecuadorian government began negotiations with Ecsa in 2023 to extend their contract and develop the Mirador Norte site, with the aim of finalizing the deal by April 2024.

However, Ecuador has been plagued by severe power outages from April to June this year, with blackouts lasting between 2 to 8 hours daily. These disruptions were caused by a combination of insufficient thermoelectric power and low water levels in hydroelectric reservoirs. Although the immediate crisis has subsided, the energy ministry has recently declared a new power emergency, anticipating a particularly dry season from September to March.

In response to these challenges, the energy ministry has required Ecsa to commit to constructing the 128MW Santa Cruz hydroelectric project to ensure a stable power supply for the Mirador Norte site. However, Ecsa has resisted this demand, arguing that the project is unnecessary given the government's plans to develop the much larger 2.4GW Santiago hydroelectric project, which would be located just 130 kilometers upriver from Mirador. Despite these assurances, the Santiago project has yet to begin construction, with operations not expected to commence until 2031 at the earliest.

Mining Vice Minister Diego Ocampo emphasized that even before the recent energy crisis, Ecuador's national grid lacked the capacity to meet Mirador Norte's energy needs. As a result, Ecsa may be required to build a thermoelectric plant with a capacity similar to that of the proposed Santa Cruz project before the contract extension can be signed.

Ocampo expressed optimism that Ecsa would agree to these terms, suggesting that the contract extension could be finalized within the next two months. However, Ecsa has not yet provided a formal response to these conditions.

Meanwhile, construction of a second processing plant at Mirador Norte, which began in February, is expected to be completed by September 2025. This new facility will enable the mine to process between 60,000 and 80,000 metric tons of material per day. Ecsa aims to increase its processing capacity to 140,000 metric tons per day by 2028, with plans to double its copper production within the same timeframe.

Ecsa currently produces more than 90% of Ecuador's copper concentrate exports, a vital component of the country's economy. In the first half of this year, Ecuador exported nearly 315,960 metric tons of copper concentrate, a 7% increase compared to the same period in 2023, according to data from the central bank.