Ecuador is moving to introduce a new mining tax framework that could significantly reshape its appeal to exploration-focused investors. The proposed Mining Inspection Fee (Tasa de Fiscalización Minera), aimed at strengthening technical and environmental oversight, seeks to generate $229 million in revenue. While well-intentioned, the fee’s structure—especially its high per-hectare rates during the exploration stage—has raised alarm within the industry.

Exploration Projects Under Pressure
The fee applies to all mining operations above small-scale activity, with rates reaching $11.50 per hectare—already the highest in Latin America, surpassing Colombia ($6.70), Chile ($4.50), and Peru ($3). For exploration-stage companies, which often generate no revenue and carry high operational risks, such a cost can exceed their typical exploration budgets, creating a potentially prohibitive barrier. The Ecuadorian Mining Chamber has criticized the proposal as “technically unfeasible,” warning it risks turning regulatory oversight into a deterrent rather than a support mechanism for sector growth.

Mixed Signals from the Cadastre Reopening
Adding to uncertainty, Ecuador is reopening its mining cadastre for the first time since 2018. Starting June 16, 2025, applications for small-scale, non-metallic concessions (e.g., sand and gravel) will be accepted, with metallic exploration licenses expected later in the year. While this move could indicate renewed engagement with investors, the limited initial scope, combined with the high inspection fees, may send mixed messages about regulatory consistency and the country’s long-term commitment to mining.

Fiscal Pressures Could Undermine Competitiveness
The new fee comes as Ecuador seeks to address a $4.6 billion fiscal gap, under pressure from the IMF to stabilize its finances. Mining already faces a sliding-scale royalty system of 3–8%, and the addition of a per-hectare fee risks pushing total costs into uncompetitive territory—particularly for pre-revenue exploration projects. The Chamber has highlighted concerns over proportionality, fairness, and legal compliance, signaling potential political and legal risks for investors.

Regional Comparison and Investment Risks
Ecuador lags behind regional peers in exploration investment: in 2024, it attracted only $67 million, compared with Argentina ($493 million), Peru ($568 million), and Chile ($637 million). With the new fee, Ecuador risks deterring junior miners and capital flight, potentially slowing future mine development and reducing long-term economic returns.

Investor Takeaways
While the cadastre reopening hints at a desire to re-engage with global investors, caution is warranted. Key factors to watch include the detailed rollout of the Mining Inspection Fee, potential adjustments following industry feedback, and the timeline for metallic exploration licensing. High-risk, early-stage investors will need to update fiscal models and consider strategic partnerships to mitigate regulatory volatility.

Ecuador remains geologically promising, but unless the government balances oversight with investment-friendly fiscal policies, the country may struggle to maintain competitiveness as a destination for exploration in Latin America.