The Ecuadorian government has cancelled the environmental license granted for the Loma Larga gold mining project, which was planned by Azuay Province in partnership with the Canada-based company DPM Metals. This decision represents a turning point in the tension between resource politics, sovereign authority, and local resistance in Latin America.[i] Thus, Ecuador has reaffirmed its sovereign authority to regulate the use of natural resources, yet at the same time, it now faces the legal, diplomatic, and reputational consequences arising from the cancellation of an already approved license. This incident highlights the delicate balance between foreign direct investment in the mining sector and the fragility of environmental security, local social demands, and investor–state relations at the international level in Latin America.
The Loma Larga project is located approximately 30 kilometers southwest of the city of Cuenca and was acquired by DPM in 2021. The company projected a capital investment of approximately 419 million USD for the project and aimed for an average annual production of 200,000 ounces of gold in the initial years.[ii] DPM claimed to have acted in accordance with both national and international environmental standards during the process of obtaining the environmental license. In July 2025, the Ecuadorian Ministry of Environment, Water, and Ecological Transition granted the license, which the company announced as a “key milestone,” noting that the required participation processes had been completed.[iii] However, the license soon lost its validity.
The main reason for the cancellation was the growing local pressure to protect the Quimsacocha water reserve. This high-altitude páramo ecosystem, covering an area of 3,200 hectares, is of critical importance for the region’s drinking water and agricultural irrigation systems.[iv] Local communities, the Cuenca Municipality, and Azuay provincial authorities argued that mining activities would contaminate these fragile water resources and disrupt the ecological balance. In mid-September 2025, more than 90,000 people marched in Cuenca, demanding the cancellation of the license under the slogan “Water is worth more than anything.”[v] In response to these protests, the national government requested the resubmission of the environmental management plan and halted construction activities in August. The precautionary principle and technical assessments from the municipal water agencies in Cuenca and Azuay served as the foundation for the final cancellation decision.
From an international relations perspective, this decision represents a concrete example of regulatory risk and a symbol of the reassertion of sovereignty. As a foreign investor, DPM may seek recourse through international arbitration or investor–state dispute settlement (ISDS) mechanisms, claiming that the cancellation of the environmental license violates investment protection principles. According to the Ecuadorian government, this action demonstrates its ability to adjust regulations to meet the needs of regional environmental groups as well as domestic political constraints. To prevent this measure from being interpreted as a form of regulatory expropriation, the Quito administration must carefully maintain a diplomatic balance.
This situation reflects the paradox of resource dependence frequently observed across Latin America. The countries of the region rely on foreign capital to exploit their natural resources, yet they simultaneously face the dynamics of the “resource curse” due to environmental risks and local opposition. As seen in the case of the Mirador copper mine in eastern Ecuador, projects financed by Chinese capital have continued despite local protests; however, in the Loma Larga case, environmental and social pressures culminated in the complete cancellation of the license. This demonstrates to other Latin American states that, under certain conditions, social and ecological resistance mechanisms can influence administrative decision-making.
Ecuador’s diplomatic ties with Canada and, more generally, its engagement with international mining capital may also be put to the test by this development. The Quito government must oversee this process in a way that protects national sovereignty and upholds investor trust, as Canada holds substantial stakes in the mining industry in Latin America. Conversely, this move may also contribute to a positive image for Ecuador in terms of environmental diplomacy. The Quito administration has sought to position itself as a state that prioritizes water security and the rights of nature over economic development.
On the domestic political level, the decision has led to the empowerment of local governments. Cuenca Mayor Cristian Zamora described the license cancellation as “the result of a decades-long struggle.” The central government, meanwhile, justified the decision as a necessary measure to uphold the “rights of nature” and protect water resources, as guaranteed by the Constitution. The emphasis on technical reports as the basis for the ruling frames the decision as one grounded in technocratic legitimacy rather than political motivation. Conversely, the decision to cancel may have adverse effects on the prospects for foreign investment in Ecuador’s mining industry. Firms could be more hesitant to invest in the nation, worrying that environmental permits might be rescinded due to political influences. This situation jeopardizes Ecuador’s appeal to investors. Nonetheless, from the government’s viewpoint, this action can also be seen as a benefit that enhances domestic legitimacy and promotes environmental justice.
From a legal perspective, DPM may choose to file an appeal within Ecuador’s domestic legal framework or pursue international arbitration by invoking bilateral investment treaties. The results of these legal actions will challenge the boundaries of Ecuador’s regulatory power. Should the company succeed, the government might be obligated to provide compensation or restore the license; conversely, if Ecuador prevails, its ability to revoke licenses based on public interest grounds will be reinforced. Regardless of the outcome, this case will establish a significant precedent for mining regulations throughout Latin America.
In conclusion, Ecuador’s cancellation of the environmental license for DPM Metals’ Loma Larga project stands as a concrete example of the complex interplay between extractive resource management, foreign investment, local rights, and sovereign regulatory authority in Latin America. This decision demonstrates that social mobilization and environmental awareness have gained enough influence to shape international investment dynamics, while also indicating a shift toward a more proactive approach to environmental governance guided by scientific evidence and constitutional principles.
[i] “Ecuador revokes environmental license for Canada’s DPM to develop gold Project”, Reuters, https://www.reuters.com/sustainability/climate-energy/ecuador-revokes-environmental-license-canadas-dpm-develop-gold-project-2025-10-04/, (Date Accessed: 05.10.2025).
[ii] Loma Larga Gold Project, Ecuador, DPM Metals, https://dpmmetals.com/assets/development/loma-larga-gold-project/, (Date Accessed: 05.10.2025).
[iii] “Dundee Precious Metals Announces Receipt of Environmental Licence for the Loma Larga Project and Provides Update on the Feasibility Study Results Timing”, Junior Mining Network, https://shorturl.at/bgOPo, (Date Accessed: 05.10.2025).
[iv] Ibid.
[v] Tens of thousands protest DPM’s Ecuador mine project near key water reserve, Reuters, https://www.reuters.com/sustainability/boards-policy-regulation/tens-thousands-protest-dundees-ecuador-mine-project-near-key-water-reserve-2025-09-16/, (Date Accessed: 05.10.2025).
