Ecuador is staging two referendums in August, which together will determine whether or not oil and mining projects in certain forests and rainforests can continue.
The referendums, one national and one local, could see 12% of the country’s crude oil output cut and six gold concessions shuttered.
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The nationwide referendum will call on voters to determine the future of oil extraction in the Yasuni nature reserve of the Amazon rainforest, known as ITT Block 43.
A total of 40% of Ecuador’s oil reserves, representing an estimated 1.67 billion barrels of oil, are held in the earth below the nature reserve and extracted by 12 drilling platforms.
The reserve was opened to oil extraction in 2013 amid opposition from environmentalists. In 2014, 750,000 people signed a petition from the Yasuni local and indigenous communities opposing oil extraction in the area.
The Yasuni reserve’s Block 43 is the fourth most productive block in Ecuador, producing 57,466 barrels of oil per day. While polls suggest the majority of Ecuadorians will vote in favour of ceasing extraction from Block 43, much of the opposition has been centred around the financial risks of cutting off such an important supply; alone, Block 43 generated $1.2bn in revenues.
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By GlobalDataState-owned oil company Petroecuador said that a “yes” vote in the referendum would cost the country $13.8bn over the next two decades. Two other, smaller, blocks in the Yasuni area would not be affected by a “yes” vote.
The local referendum in Quito, Ecuador’s capital, also faces opposition on the same grounds. Should it succeed, mining would be outlawed in the country’s Choco Andino forest, which would see the end of six mining concessions. “It is not moral that we stop an industry which could create many opportunities over untrue fears,” said Maria Eulalia Silva, president of Ecuador’s Chamber of Mining.
The chamber stated that $1bn of investment over the next two years would be scuppered by the closing of the six gold concessions. Despite the coming referendum, and the threat it poses to the future of mining in Ecuador, Australian miner SolGold announced in July that it will proceed with a $2.7bn, 25-year gold concession in the country.
