Ecuador gold lures big mining stakes

Ecuador, whose gold mining capacity has been largely forgotten since its 16th-century colonial mining towns were destroyed by Indians, is generating international investment interest. Geologists and mining engineers believe that within the next decade the country will be the biggest gold producer in Latin America. ``Ecuador has a complicated geology, but the heavy plutonic and volcanic activity suggests the presence of widespread ... gold deposits,'' says Martin Litherland, a British scientist leading an assessment project linked with the state's infant mining concern, Inemin.

``It is simply a matter of understanding the pattern and finding the metal's precise locations. The rivers are full of it,'' Dr. Litherland adds.

Since the government of President Le'on Febres Cordero paved the way with mining concession laws two years ago, investment in precious-metal exploration has risen to an estimated $50 million, with 4.75 million hectares (11.87 million acres), a sixth of the country's land area, being applied for.

Although the investment is a pittance in the gold mining world, it is growing rapidly, according to Ecuador's secretary of mines, Manuel Ora. ``This year saw it increase by nearly $30 million and, in 1988, two projects alone will boost it by a further $40 million,'' he says.

Inemin is being inundated with applications for exploration contracts from big international companies. Edgar Salazar, Inemin's technical manager, said, ``Within a decade only 10 percent of the gold contracts applied for will average a ton a year, and Ecuador will be producing 37 tons annually.''

At least 23 mining companies and consortia have started operations, including Cyprus, Wright Engineers, Rayrock, BRGM, Cogea, Teck Corporation, Robertson Research, and British Petroleum.

Ecuador, which is exporting 2.4 tons of gold this year for the first time, is producing an estimated 10 tons of it annually. The country's famous old mines at Portovelo produce 1 tons; those at Ponce Enr'iquez, tons; and those in the Nambija area, 4 tons. By comparison, Peru is producing 6 tons, and in 1985 Brazil mined 29; Colombia, 35; and the United States, 75.

In Ecuador about two tons of gold are panned with old-fashioned methods from rivers, although a dredging plant has started in El Oro Province. The techniques are antiquated and dangerous. Mercury is used to separate the gold by hand from the pulverized ore. Nambija, its estimated population of 9,000 embroiled in filth and violence, is where Ecuador's latest gold rush began. There, nonstop blasting takes place so randomly in tunnels that cave-ins occur constantly.

``I'm willing to take my hat off to those people,'' said Sebastian Reidl, a Hungarian mining engineer. ``With their determination they proved to the government Ecuador had a mining industry.''

The primitive crushing methods, however, waste 35 percent of the gold, and ore below 10 grams per ton is discarded. With sophisticated techniques and high-volume mining, ore of two grams per ton can be profitable.

According to one theory, Ecuador was the 16th-century Latin American treasure house, there being no history of gold mines then in its neighboring countries or Mexico. Alexander Hirtz, a geologist involved in an initial $500,000 gold exploration investment, said records showed 22 Ecuadorean colonial mining towns were destroyed by Indians, with only Zaruma (Portovelo) surviving.

A search for the vanished towns is under way, and a Norwegian company, Noruega, has rediscovered Loyola, reputed by the Spanish to have had more gold than Nambija. Mineral extraction is expected within five years.