Ecuador is estimated to hold a prodigious source of extractable reserves including antimony, copper, iron ore, silver, and world-class gold deposits. It is considered an untapped mineral potential, and geologists believe the country holds as much copper as Peru—the world’s second largest producer. These rare-earth and minor metals are essential structural materials needed for the deployment of renewable technology such as wind turbines and solar panels, which are growing in demand amid global decarbonization. However, several questions remain: how does the extraction of these raw materials impact local communities and ecologies? What are the cost-benefit implications of relying on extractivist economic models for countries such as Ecuador? Most importantly, how can climate finance better aid sustainable development in Ecuador to ensure it benefits from renewable technologies while avoiding local environmental degradation?
There is very little specific legislation which governs the sourcing of raw materials. The OECD Due Diligence Guidance for Responsible Mineral Supply Chains provides an important source of reference for the responsible corporate management of supply chains and resource extraction. While these non-binding guidelines underline important considerations regarding human rights abuses and conflict, they fail to include any environmental considerations of mining extraction and its direct impact on vulnerable stakeholders.
The electric vehicles (EV) industry is one prominent example of harmful supply chains which contribute to environmental and social degradation through the extraction and transportation of raw materials. At the same time, however, the EV industry offers lithium-rich countries a lucrative opportunity to capitalize on the production of EV batteries; it is estimated that the worldwide market for cathode for lithium-ion batteries will increase from $7 billion in 2018, to $58.8 billion by 2024. Today, more than 50 percent of the global lithium resources are concentrated in the Lithium Triangle region of Chile, Argentina, and Bolivia. The extractive experiences of these countries, particularly Chile and Argentina, are useful examples for sustainable mining in Ecuador.
