Decree 273 in Effect: New 3-8% Mining Royalty Scale and Self-Power Mandate

The Royalty Framework

Decree 273, which entered into force following National Assembly approval on February 26, 2026 (77-70 vote), introduces Ecuador's first price-linked mining royalty system. The variable rate structure ties royalty obligations to the trailing three-year average of London Metal Exchange (LME) prices for the relevant metal.

Gold Royalty Schedule

LME 3-Year Average (USD/oz)	Royalty Rate
Below $1,600	3%
$1,600 - $1,800	4%
$1,800 - $2,100	5% (current effective rate)
$2,100 - $2,400	6-7%
Above $2,400	8% (ceiling)

At the current gold price of approximately $2,050/oz, the trailing three-year average falls in the 5% band. The 8% ceiling would activate if sustained prices exceed $2,400/oz — a level gold has not consistently maintained.

Copper Royalty Schedule

Copper concessions follow a similar structure tied to LME copper futures:

LME 3-Year Average (USD/lb)	Royalty Rate
Below $3.00	3%
$3.00 - $3.80	4%
$3.80 - $4.50	5%
Above $4.50	6-8%

Self-Power Mandate

Decree 273 includes a 100% self-power generation mandate for all large-scale mining operations. Companies must generate or secure dedicated power supply for their mine sites, eliminating reliance on Ecuador's national grid — which has been strained by recurring energy crises including the 2024 drought-driven blackouts.

This requirement effectively forces mining companies to invest in on-site generation capacity, likely through:

• Natural gas or diesel generators for baseload
• Solar installations for supplementary power
• Potential hydroelectric micro-plants at sites with water access

Lundin Gold has already invested in backup generation at Fruta del Norte following the 2024 grid disruptions. The new mandate formalizes what larger operators were already doing and extends it to all concession holders.

The $14B+ Project Pipeline

The decree clears regulatory uncertainty for Ecuador's largest mining investments:

Project	Company	Metal	Est. Investment	Status
Cascabel	SolGold / Cornerstone Capital	Copper-gold	$4.5B	Pre-feasibility
Llurimagua	Codelco / ENAMI EP	Copper	$3.0B (tender)	Concession tender
Fruta del Norte	Lundin Gold	Gold	$100M expansion	Producing, expanding
Warintza	Solaris Resources	Copper	$2.5B	Exploration/permitting
Loma Larga	Dundee Precious Metals	Gold-copper	$1.2B	Environmental review
Other concessions	Various	Various	$2.5B+	Early-stage
Total			$14B+

Llurimagua: The Marquee Tender

The $3 billion Llurimagua copper concession is the most watched tender in the pipeline. Located in Imbabura province, the project has been jointly held by Chile's Codelco and Ecuador's state mining company ENAMI EP since 2012, but stalled due to environmental objections and political uncertainty.

Under Decree 273, the concession will be re-tendered to international operators. Hancock Prospecting (Australia), BHP, and several Chinese mining groups have expressed interest. The tender process is expected to launch in Q2 2026.

Concession Registry Reopening

The decree mandates the reopening of Ecuador's mining concession registry in Q1 2026 — the first new concession awards since the moratorium imposed during the Lasso administration. The registry will accept applications for exploration permits in designated mining zones, primarily in:

• Zamora-Chinchipe — gold and copper deposits in the Cordillera del Cóndor
• Azuay — gold-copper porphyry systems
• Imbabura — copper deposits including Llurimagua
• Morona-Santiago — copper exploration areas

Industry Reaction

The Cámara de Minería del Ecuador described the royalty scale as "competitive with regional benchmarks," noting that Peru's effective mining royalty ranges from 1-12% and Chile's from 5-14% depending on operating margin.

Lundin Gold CEO Ron Hochstein stated the company is proceeding with a $100 million expansion at Fruta del Norte, citing the regulatory clarity provided by Decree 273.

However, environmental and indigenous organizations have opposed the broader Mining and Energy Reform Law, of which Decree 273 is the implementing regulation. Protests in Zamora-Chinchipe and Azuay in early March targeted mining concessions in water-sensitive areas.

What to Watch

• Concession registry applications — the volume and quality of Q1 applications will indicate industry confidence
• Llurimagua tender participants — which major miners submit bids will signal Ecuador's standing as an investment destination
• Self-power compliance costs — capital expenditure estimates for on-site generation at greenfield projects
• Gold price trajectory — a sustained move above $2,400/oz would push royalties to the 8% ceiling, potentially reducing Ecuador's competitiveness
• Environmental litigation — constitutional challenges to the Mining and Energy Law could delay concession awards
• Community opposition — anti-mining protests in Zamora-Chinchipe and Azuay remain a project-level risk

Sources: Cuenca Dispatch, Chambers and Partners Mining Guide 2026, ARCOM