The location of SolGold’s Cascabel concession is an investor's nightmare. Cascabel is located in close proximity to the Colombian/Ecuadorian border, an area where Australia’s Department of Foreign Affairs and Trade (DFAT) advises DO NOT TRAVEL. “We advise against all travel here due to the very high risk. If you do travel, you should typically seek professional security advice. Be aware that regular travel insurance policies will be void and that the Australian Government is unlikely to be able to provide consular assistance.”
Around 26% of SolGold is owned by BHP and Newcrest Mining. SolGold have never built a mine and do not have the capacity to raise the billions of dollars to build a mine at Cascabel, so will most likely sell the concession. The buyers then will inherit all the risks associated with building and operating the mine. SolGold will effectively wash their hands of the operation.
SolGold are anticipating that the Alpala mine in the Cascabel concession will be active for 50-60 years. It will also produce copper, gold and silver from 2.4 billion tonnes of ore. It is the opinion of MRAG that not only will the mine be built in a politically unstable and dangerous region, but infrastructure required for the mine, could come under attack or even sabotage, as could the mine itself.
In their 2019 Preliminary Economic Assessment (PEA), SolGold suggested that mining material will be transported, via pipeline, 60 km north west towards San Lorenzo. San Lorenzo is a known organised crime hot spot, located near where 3 journalists were murdered in April 2018. The murders shocked Ecuador. The police station at San Lorenzo was also car bombed (the first car bombing in Ecuador) in January 2018 by Revolutionary Armed Forces of Colombia (FARC) dissidents. As a result, the President of Ecuador, Lenin Moreno, declared a limited State of Emergency in the cities of San Lorenzo and Eloy Alfaro to enhance police and military authority.
In August 2019 when the FARC guerrillas announced that the 2016 peace deal had failed and that the re-established armed revolution in Colombia. The Ecuadorian press reported widespread concern in Ecuador regarding the potential impact that the FARC could have in the north of the country. “Return to the FARC weapons causes alarm in Carchi…Tobar Donoso is one of the areas disputed by the FARC, because, according to residents, it is a corridor used by Mexican drug cartels and the front of the disappeared alias Guacho.”
Tobar Donoso is located 50km north-west of Cascabel.
From San Lorenzo, the pipeline will then continue 100km south west to the port of Esmeraldas. San Lorenzo has also been a hot bed of illegal mining activity for many years. Gold mining is now seen as being as lucrative as coca growing by organised crime syndicates in Colombia, with Ecuadorian paper El Comercio saying: “…But military information warns that Colombian criminal groups, linked to FARC dissidents or drug traffickers, are also behind the illegal mining that is registered in the two cantons, due to their proximity to the Nariño department."
Another active group in the region is Colombia’s National Liberation Army (ELN). Reports suggested in early 2019 that the ELN was targeting border areas inside Ecuador including “facilities and units in the municipalities of Mira in the province of Carchi and San Lorenzo in Esmeraldas as potential targets”.
Both the FARC and ELN have targeted energy infrastructure inside Colombia over the years. Up to April 2019 there have been around 20 attacks on Colombian pipelines in 2019. The 485-mile (780-km) Cano Limon pipeline was kept offline for most of 2018 because of more than 80 bombings. An attack in April 2019 occurred in the Province of Narino, just north of the Ecuadorian border. Narino is also a hotspot for illegal mines and coca growing where the ELN and another criminal group, the Urabeños have made millions of dollars in recent years. Reports suggest that the gold sourced from illegal mining from Narino is transported into Ecuador.
SolGold also state in the PEA that workers at Alpala will most likely be bussed in each day from Ibarra. This probably means that the Alpala mine site itself will have few people staying at the mine overnight, except security staff. Given the precarious location of the mine, it is apparent that the mine itself (and pipeline) could be a target for groups wanting to cause problems such as armed robbery. The mine will most likely be a magnet for many people throughout the region. Power for the mine is also suggested to partially come from Colombia.
The Cascabel mining site at Alpala is ~10km from the DO NOT TRAVEL zone, with entry into the proposed mining through Roca Fuerte almost located on the boundary of the DO NOT TRAVEL zone. Illegal mining in close proximity to the Cascabel concession has occurred at El Cielito (approx. 5-10km north of Cascabel) between 2017 and 2019. SolGold has apparently employed the services of security firm G4S to look after its Cascabel security.
The largest illegal mining operation in Ecuador in almost 30 years, occurred north of the village of Buenos Aires, on a mining concession called Imba 2, owned by Australian mining magnate Gina Rinehart between November 2017 and July 2019. The main illegal mining area, at a place called El Triunfo, was located only 10km south of Alpala. At this location over 10,000 illegal miners operated. They miners were eventually evicted after the Moreno Government sent in 2000 troops and hundreds of police officers.
The mining operations inside Imba 2 were rife with organised crime and mafia influence. A number of brutal murders occurred near the mines. Drug trafficking, prostitution and other criminal acts undermined the security of the existing township of Buenos Aires, with organised criminals from Colombia and Venezuela being pinpointed as key organisers. In August 2018 12 hooded men stole 18 cubic metres of confiscated gold material that had been stored by the local police. Police officer and mining officials have also been implicated in corruption as have officials in the judicial system.
An illegal transport network was established which allowed for the transportation and storing of rock from the mine sites. Between $50,000 and $150,000 was required by truck drivers to “oil the road” and pay bribes on the way of moving illegally sourced materials to processing sites in the south of the country. Destinations of the illegally mined rock included: Azuay, El Oro, Camilo Ponce Enriquez, Zaruma and Portovelo. After processing, the gold was then illegally transported out of the country. It is clear then, that an organised crime syndicate associated with gold mining is operating inside Ecuador, with gold also being funneled in from Colombia. Developers of Alpala mine will have to build their mine on shaky grounds indeed. The following summary by Open Democracy accurately describes the powder keg.
“Under different names … the actors operating on the Ecuador- Colombia border remain the same:
Paramilitary groups which continue to defend the interests of drug traffickers and landowners, even though the AUC no longer exists.
Dissident groups of the FARC now turned criminal and related to drug trafficking.
Colombian drug traffickers allied with Mexican cartels.
The armed forces (the army and the police) of Ecuador and Colombia.
State presence of both nations.
There is also a new actor: the illegal miners who operate in Imbabura, Carchi, Esmeraldas and Sucumbíos, who generate problems for the local populations.”