Ecuador, Codelco claim victory over Llurimagua mining arbitration

By Alexandra Valencia and Fabian Cambero

QUITO/SANTIAGO (Reuters) -The Ecuador attorney general's office and Chilean state miner Codelco both claimed victory on Friday after an international arbitration court ordered Ecuador to pay some $25 million of a $568 million claim regarding a major copper project.

Codelco and Ecuadorean state miner Enami EP had in 2016 signed agreements to jointly develop the Llurimagua mining project in northern Ecuador, but Codelco in 2021 launched an arbitration process with the International Chamber of Commerce, accusing Ecuador of failing to fulfill its obligations.

This included not finalizing a plan to form a joint venture to operate the project, in which Codelco would have held 49% to Enami's 51%.

"Of a claim of $567.7 million, the Court only ordered the reimbursement (to Codelco) of $25.3 million," Ecuador's attorney general's office said in a statement, adding that the ruling would save the state some $540 million. "All of this constitutes a resounding legal victory for Ecuador."

Under the ruling, Enami is set to retain full ownership and control of the project.

Codelco, however, said in its own statement that the court had ruled against Ecuador, citing the payment ordered to cover costs incurred by Codelco during the project's exploration phase, as well as maintenance costs and interest payments.

"The court determined that Ecuador incurred a civil responsibility for failing to comply with several agreements," Codelco said, adding that the ruling said Ecuador had also failed to negotiate with shareholders in good faith.

"The court also rejected Ecuador and Enami EP's request that Codelco hand over the geological information Codelco generated in Llurimagua, which is the property of the corporation," it added. "Codelco is reviewing this judgment and analyzing the next steps it will take."

Codelco in 2022 launched a separate arbitration procedure against Ecuador regarding the project with the International Centre for Settlement of Investment Disputes. This process remains ongoing.

The ICC did not immediately respond to a request for comment.

(Reporting by Alexandra Valencia in Quito, Fabian Cambero in Santiago and Sarah Morland in Mexico City; Writing by Natalia Siniawski; Editing by Brendan O'Boyle and Matthew Lewis)

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