After mass protests, Ecuador kills DPM Metals’ Loma Larga gold project approval

As environmental and social tensions escalate across Latin America’s mining corridors, Ecuador has delivered one of its sharpest reversals yet — officially revoking the environmental license for DPM Metals’ Loma Larga gold-copper-silver project. The move not only halts one of the country’s most advanced undeveloped gold mines but also reignites the debate over how far community and ecological resistance can redefine national resource policy.

The government’s Ministry of Environment, Water and Ecological Transition (MAATE) confirmed the cancellation on Monday, citing risks to local water systems and the “precautionary principle” that prioritizes environmental and human-health protection when scientific uncertainty remains. For DPM Metals — a subsidiary of Canadian miner Dundee Precious Metals Inc. (TSE: DPM) — the setback is more than regulatory: it’s an existential blow to its Ecuador strategy and a signal to global investors that local consent may now outweigh capital commitments in the Andes.

Why did Ecuador revoke DPM Metals’ environmental permit for the Loma Larga mine?

Government officials explained that the revocation followed detailed assessments by regional water authorities in Cuenca and Azuay, who warned that the project threatened the fragile Quimsacocha water reserve — a high-altitude páramo ecosystem supplying drinking and irrigation water to thousands of residents. The ministry said it acted to prevent “irreversible impacts” on aquifers and wetlands that anchor the Andean watershed.

The decision followed weeks of intense demonstrations. In September, nearly 90,000 protesters filled Cuenca’s historic center, chanting “El agua vale más que el oro” (“Water is worth more than gold”), demanding the government scrap DPM’s license. Environmental organizations, local mayors, and Indigenous groups rallied under a shared concern that open-pit mining could contaminate streams vital to agriculture and drinking water.

Cuenca mayor Cristian Zamora hailed the announcement as “a victory for life and the future of the páramo.” His remarks echoed the sentiment that Ecuador’s constitutional recognition of the Rights of Nature—a world first in 2008—obliges the state to intervene when ecosystems face potential harm, even before damage occurs.

For DPM Metals, however, the decision reverses what had seemed a rare regulatory breakthrough. The firm had secured its environmental license in July 2025, after years of technical submissions and community consultations. The project, located roughly 30 kilometers southwest of Cuenca, was expected to become Ecuador’s next large-scale underground mine, producing an estimated 200,000 ounces of gold annually during its first five years.

How big was the economic and strategic stake in the Loma Larga project?

DPM Metals acquired the project in 2021 through its $132 million takeover of Vancouver-based INV Metals Inc., seeing Loma Larga as its entry point into South America. The company envisioned a low-footprint, underground operation designed to complement its profitable Bulgarian and Namibian assets.

Initial feasibility studies pegged capital expenditure at about $419 million, promising a 28 percent internal rate of return (IRR) based on gold prices averaging $1,650 per ounce. However, by early 2025, revised figures showed costs had ballooned to nearly $593 million, while expected output fell roughly 15 percent. The updated IRR dropped to 18 percent — a major dent to investor confidence.

The economics were further complicated by Ecuador’s shifting fiscal regime. President Daniel Noboa’s administration has balanced investor-friendly signals with populist environmental safeguards. While the country needs foreign capital to diversify away from oil exports, the Loma Larga case illustrates how politically risky mining remains when community consent fractures.

Even before the license revocation, DPM had suspended a 23,000-metre drilling campaign after demonstrations in nearby parishes. The company maintained that its design met global best-practice standards and that underground mining would minimize surface disturbance. But local activists pointed out that Ecuador’s high-altitude hydrology is uniquely sensitive — and even limited waste mismanagement could acidify water sources downstream.

What does this reveal about Ecuador’s shifting mining policy and investor climate?

Ecuador’s stance on resource extraction has oscillated sharply over the past decade. Former president Lenín Moreno sought to accelerate mining as a pillar of post-oil growth, granting concessions to international companies such as SolGold plc, Lundin Gold Inc., and Zijin Mining Group Co. Ltd. Yet each wave of approvals triggered localized resistance, legal appeals, and environmental court rulings.

Currently, only two large-scale operations — Fruta del Norte (gold) and Mirador (copper) — are in production. Dozens of projects remain stalled in various legal limbos, facing referendums or judicial suspensions.

The Loma Larga revocation reinforces a growing perception that social license is now the decisive factor for project viability in Ecuador. The precautionary principle, embedded in Ecuador’s environmental code, empowers authorities to revoke or deny permits even when data is inconclusive. Investors increasingly view this as a regulatory wildcard — one that complicates project financing and risk modeling.

For international capital markets, Ecuador’s message is mixed. On one hand, the decision enhances environmental credibility and public legitimacy for Noboa’s administration. On the other, it may cool enthusiasm among mid-tier miners exploring Andean assets, especially as neighboring Peru and Colombia offer clearer permitting timelines despite their own instability.

How did local communities and environmental activists turn Ecuador’s Loma Larga mine into a national water rights showdown?

Unlike many resource disputes resolved behind closed doors, Loma Larga’s fate was driven by visible, grassroots mobilization. Environmental NGOs, Catholic dioceses, Indigenous confederations, and farmers’ associations coordinated through social media and civic assemblies.

Since 2021, Cuenca’s residents have voted overwhelmingly against mining near water sources in local referendums. Court rulings have repeatedly upheld those votes, framing them as expressions of constitutional environmental rights. That legal groundwork gave MAATE political cover to act decisively this time.

Community leaders also leveraged Ecuador’s international image. They positioned their struggle as a test of whether a nation that enshrined “Rights of Nature” could still authorize industrial mining within a protected watershed. The narrative resonated beyond borders, attracting attention from European green parties and sustainability investors who questioned the credibility of ESG-linked projects in fragile ecosystems.

What are the implications for DPM Metals and for Ecuador’s mining sector outlook?

For DPM Metals, headquartered in Toronto, the loss of its Ecuador permit could translate into significant write-downs. The company may pursue administrative appeals or even international arbitration under investment-protection treaties. Such disputes, however, can drag for years and risk reputational fallout.

On the market side, Dundee Precious Metals’ shares were already under pressure in early October 2025, reflecting investor uncertainty. Analysts tracking the stock noted that Ecuador accounted for a sizable portion of DPM’s medium-term growth pipeline; its removal narrows the company’s project portfolio to Europe and Africa.

Sector analysts see a broader chilling effect. Several Canadian and Australian juniors holding concessions in Ecuador’s southern Andes — including Adventus Mining Corp., Salazar Resources Ltd., and Solaris Resources Inc. — are expected to reassess project timelines or diversify exploration budgets elsewhere in Latin America.

Yet domestic political calculus suggests the Noboa government may tolerate slower mining growth in exchange for stability. The administration faces mounting social pressures and aims to project environmental stewardship before the 2026 election cycle.

How the Loma Larga case reflects a global reckoning for extractive industries

In a global context, Ecuador’s decision mirrors a broader reckoning across resource economies from Chile to Indonesia. The era when technical compliance could substitute for social consent is fading. Investors accustomed to permitting as a linear administrative process now confront a more complex reality — one where trust, transparency, and territorial rights determine project survival as much as ore grades or feasibility models.

DPM Metals’ misstep lay not in engineering but in narrative. The company satisfied formal requirements yet failed to cultivate enduring legitimacy among local stakeholders. Its environmental license became a symbol of technocratic overreach rather than progress.

For Ecuador, the path forward requires a delicate balance. To remain investable, it must create frameworks where communities participate early and benefit tangibly, while maintaining rigorous environmental standards. Failing that, the country risks repeating cycles of boom-and-backlash that have dogged Latin American mining for decades.

As global gold prices remain near record highs, the opportunity cost of stalling Loma Larga is real — but so is the cost of ignoring social and ecological frontiers. Ecuador’s policymakers appear to have chosen caution over capital. Whether that gamble fosters long-term sustainability or deters future investment will define the next chapter of its resource narrative.