Mountains of Trouble: Bumpy road for Rinehart’s offshore mining push

Lucia Chicaiza watched a caravan of headlights inch towards her northern Ecuadorian township. When the trucks and armoured vehicles stopped, they disgorged hundreds of men carrying guns and anti-riot shields. They were met by a crowd of farmers, women and elderly people gathered on the main street of the La Merced de Buenos Aires township – little more than a collection of wooden homes in windswept Andean moorland foothills.Soon, all that stood between the crowd and more than 500 heavily armed police and soldiers was a green hand-painted banner declaring the township’s right to “peaceful resistance”. “They were armed as if they were going to war,” remembers Chicaiza, the parish’s president, of that night in August 2021. “We will never forget it.” The troops were there to protect the interests of Australia’s richest person – billionaire mining magnate Gina Rinehart.For more than 100 days, local villagers like Chicaiza had blocked Rinehart’s subsidiary company Hanrine Ecuadorian Exploration and Mining from accessing its sprawling exploration concessions in the gold and copper-rich ridges ringing the town.Villagers claimed the concessions were awarded in a dubious process marred by irregularities, without consultation, and potentially in breach of Ecuadorian law.Parish president Lucia Chicaiza in La Merced de Buenos Aires.James RossThat cold morning in 2021, Chicaiza watched police use their shields to charge against elderly women to break the human chain of protesters blocking the road. She remembers officers stepping on the women and dragging them by the legs as they teargassed their way into the township.Locals futilely fought back for hours before troops cleared the way for Hanrine’s buses and trucks. Chicaiza says workers inside clapped and laughed as they went past.The incident is just one of many controversies surrounding Hanrine’s operations in Ecuador that have received little scrutiny in Australia.This masthead spent a month in Ecuador investigating the activities of the company wholly owned by Rinehart’s Hancock Prospecting, and its alleged role in major security and environmental concerns. Over the course of several months, it examined hundreds of pages of government documents, company records, court files and research papers. It interviewed dozens of villagers, environmental activists, experts and former Hanrine employees. They detailed allegations of human rights breaches; a culture of intimidation and fear; violence; enablement of illegal mining; and irregularities in the granting of the company’s concessions.The claims raise questions about the conduct of one of Australia’s largest companies in a nation wracked by corruption and unrest at a time when spiking copper and gold prices mean its significant reserves of both are attracting international interest. Hanrine has also entered a partnership with another Australian miner to develop a project in southern Ecuador.There is no suggestion Rinehart authorised or condoned Hanrine’s alleged conduct, or was aware of the allegations against her company.The accusations against Hanrine also expose what governance groups say is a lack of scrutiny subsidiaries face when they operate overseas, especially where they benefit from murky legal and regulatory frameworks and weak institutional oversight.“The case of Hanrine is a case of extreme violence at a Latin American level,” says Yuly Tenorio, an Ecuadorian lawyer who has represented La Merced de Buenos Aires locals in court, pointing to incidents beyond the 2021 police and army operation. “We feel there’s a systemic violation of rights, and that’s unforgivable.”The villagers have since had wins against Hanrine – the company effectively abandoned its worker camps after claims over water rights halted its exploration. It’s a fragile status quo. Hanrine retains its rights over the concessions, and locals fear the company could return.Its exit also created a vacuum that hundreds of illegal gold miners have filled. Backed by violent armed groups, they’ve taken over parts of Hanrine’s concessions, unleashing a major security crisis in the once-sleepy farming town.The illegal mines have been declared a military target and come under heavy artillery fire by the armed forces, turning Rinehart’s Ecuadorian possessions into a literal battlefield.Villagers and environmental groups believe Hanrine has an ethical and legal responsibility to prevent illegal mining and the environmental degradation it causes even if the company cannot, for now, mine the area itself.Anti-corruption and human rights groups, including Transparency International Australia and Global Witness, say Hanrine also has human rights and transparency obligations.“This includes ensuring proper consultation, free, prior and informed consent with local communities on whose land mining is being proposed,” says Transparency International Australia chief executive Clancy Moore. Legal experts say Ecuador’s dated mining laws operate in a grey area, responsibility is determined ad hoc, guidelines around environmental liability are murky, and enforcement is close to non-existent. Laying blame for the disastrous chain of events in La Merced de Buenos Aires is complicated.Stressing it has never progressed beyond exploration activity, Hanrine categorically denies any wrongdoing and claims criticisms are “unsubstantiated allegations supplied by anti-prosperity environmental activists and individuals aligned with, and profiting from, illegal mining and associated criminal activity, as they provide support and supplies for a profit to illegal miners operating there”. Hanrine chief executive Carlos de Miguel said in a statement in response to extensive questions by this masthead that the company complied with relevant laws and regulations.“To suggest otherwise is false and blatantly defamatory,” he said.THE GOLD RUSH Hanrine had just won the rights to thousands of hectares of land in La Merced de Buenos Aires when illegal mining arrived in the parish in late 2017.Traces of gold were discovered around the community of El Triunfo, a collection of farms on the town’s outskirts, attracting illegal miners from across Ecuador and neighbouring countries.Versions of how the precious metal came to be found vary. Some claim granting Hanrine concessions tipped the illegal miners off about potentially lucrative mineral deposits. Others say a worker digging up a local road accidentally discovered gold. The labourer, this version of events goes, was from Zaruma, a gold mining town in Ecuador’s south and itself home to a booming illegal mining industry. He had recognised the find immediately, tipping off other miners.“No one believed it,” says Sulema Armas, a dairy farmer and mining opponent from La Merced de Buenos Aires. “We said: ‘These people are crazy. Why are they going up there and filling bags with rocks?’ We were so naive.” Mining was so foreign to locals that at one point police officers helped illegal miners load bags of rock into vehicles, unaware they were being mined for gold.Before long, 10,000 illegal miners flooded La Merced de Buenos Aires, quickly outnumbering its 2000 inhabitants. Organised crime groups followed, seizing control of the territory and taking a cut of miners’ profits in exchange for protection, a tactic known in Ecuador as a “vaccine”.La Merced de Buenos Aires became a lawless town where prostitution, gambling, drug trafficking and violence ran rampant. Shootings between members of rival groups vying for control of the mines became commonplace. So did kidnappings, extortions, executions and mutilations. Workers were punished if they were suspected of working with rivals. Others simply disappeared.“They would take the dead bodies out in pick-up trucks,” Lucia Chicaiza says. “People were getting shot, stabbed. A couple of times, people even saw [the miners] taking bodies out with their throats cut and arms cut off.” Locals felt they had been abandoned by authorities, until a deadly gunfight between armed groups in 2019 thrust La Merced de Buenos Aires into the national agenda. Scores died in the fighting, their bodies dumped in ravines and unmarked graves.“They’re going to dig for gold and they are going to find corpses,” says a local source familiar with the mining conflict who did not want to be identified for fear of reprisals. The then Ecuadorian president, Lenin Moreno, declared a state of emergency over “the grave internal commotion”, allowing the government to deploy thousands of police and military personnel to clear out the illegal miners.A fleeting peace returned. Soon, though, rumours circulated that the land the illegal miners had taken over belonged to a company. “It was then that we found out it was Hanrine,” says Chicaiza.HANRINE WHO?Hanrine had obtained its concessions, more than 20,000 hectares of land known as the IMBA project, in late 2017, but illegal mining prevented exploration.After the government’s 2019 intervention, Hanrine could finally attempt to move in. But locals like Chicaiza, who had spent years fighting for authorities to intervene in the illegal mines, felt blindsided. Ecuadorian authorities had granted Hanrine the concessions without consulting villagers in La Merced de Buenos Aires or the Awa Indigenous community, whose ancestral lands encroach into part of the tenement. That is despite two separate provisions in the country’s Constitution recognising the rights of locals and Indigenous groups to be consulted on environment-altering projects. Community consultation failures have previously led to other companies losing their tenements. In 2018 an Ecuadorian court ruled 52 concessions in and around the A’i Cofan Sinangoe Indigenous community’s territory in the Amazon be revoked on the basis they had been granted without consultation. A human rights committee of non-government MPs in Ecuador’s national assembly would later describe the lack of consultation as a “clear violation of the rights of Indigenous communities and the general population of the parish”. It called for a thorough investigation into the concession process, which was also plagued by irregularities.An earlier report by a government watchdog found the awarding of the concessions lacked necessary geological and technical information, mining areas were reserved for longer than allowed, mining titles were registered after the required deadline, and the administrative protection granted to Hanrine over illegal mining in the area had been based on the wrong technical report.In Ecuador, consultation is a constitutional responsibility of the state. Mining companies may also sign up to voluntary codes, such as that of the International Council of Mining and Metals or the Initiative for Responsible Mining Assurance, which recognise the need to engage, consult and build trust with local communities, particularly Indigenous groups. Neither Hanrine nor Hancock Prospecting is publicly listed as a signatory to either framework.Still, Global Witness head of policy and advocacy Emily Iona Stewart says there is “no scenario where a mining company as large as this is not aware of the duty of care that they have”. “The less you do as a company upfront in terms of working with the community, in terms of raising your standards, the more violence that there is further down the line, which is exactly what this company is experiencing,” Stewart says. Shortly after Chicaiza found out about Hanrine, she says, buses filled with its staff started arriving at La Merced de Buenos Aires. Locals, scarred by their experience with illegal mining groups, blocked them from entering the township and declared they were exercising a right to peaceful resistance against mining in the territory, legal or otherwise. As blue-overalled workers filed out of the vehicles, Chicaiza immediately felt some faces looked familiar.“We recognised many of them as those working in the illegal mines,” she remembers.“Those people who had been controlling everything with machetes, revolvers and threats, arrived dressed in company uniforms.”This masthead has identified one man involved in the early illegal gold rush in La Merced de Buenos Aires who was later in charge of a community engagement program supported by Hanrine.Luis Valencia was part of a bizarre illegal-miner push in 2019 to convince the Ecuadorian government to allow them to mine part of Hanrine’s concessions to rein in the violence. Valencia, a former conservationist who fought palm oil plantations and loggers in the late ’90s, told the media at the time: “We are all armed over there because everyone has to look out for their own interests.” In a local TV interview, he claimed he had negotiated a deal with Hanrine to utilise 300 hectares for “artisanal mining”, a controversial term often used to disguise large-scale illegal mining linked to organised crime networks. “Now we are illegals, we are delinquents, because we are in a territory that is already under someone else’s name, that was handed out,” Valencia said at the time. He died in a hail of bullets during an ambush in his home town of San Lorenzo in 2024.In response to questions by this masthead, Hanrine confirmed it had supported a program run by Valencia but said the company “never allowed any other party to explore or conduct any mining activity on our tenements”. But the damage to the town from years of illegal mining and subsequent violence was done. “We opened our eyes and said no more. Since then, we have been resisting,” Chicaiza says.Some locals, including members of the Awa Indigenous community, took up jobs with Hanrine as it began setting up, lured by steady income, improved housing and associated benefits. A member of the Awa Indigenous community wears a Hanrine T-shirt during a communal labour meet-up known as a “minga” in Palmira de Toctemí, a community in the Awa’s ancestral land in La Merced de Buenos Aires parish.Photo: James Ross.For others, the company represented an extension of the illegal mining threat to the environment, and they were hell-bent on fighting it.Yuly Tenorio, the Ecuadorian lawyer who has represented La Merced de Buenos Aires locals, says Hanrine should have, at several moments since being granted the concessions, taken a much tougher approach to illegal miners to show the community it was acting in good faith.“But that never happened,” Tenorio says.Under Ecuador’s mining law, concession holders can be fined and even have their tenements stripped for allowing “third parties who are not legally authorised to do so” to mine within their areas of operation.Maria del Mar Heredia, a legal director at international law firm Dentons, says that in reality matters are not that straightforward.A hillside showing illegal mining in 2025CREDIT: JAMES ROSS“Simply being the titleholder doesn’t automatically make you responsible for illegal mining taking place within your concession,” says Heredia, speaking broadly about the country’s legal context. “In a certain way, you need to establish that you are not involved in it, and that it’s beyond your control.”That depends on whether a company co-operates with authorities, the mitigating actions it takes, and whether it complies with permits and environmental reporting requirements.Even then, Heredia says Ecuador’s mining regulator, ARCOM, does not have the resources or technical capacity to investigate, prosecute and sanction much of the wrongdoing.Heredia points to the controversial mining tax introduced by the Ecuadorian government last year, designed to help fund the regulator’s illegal mining fight. Only about 10 per cent of concession holders have paid it, but Heredia says ARCOM isn’t chasing non-payers.“On top of that, half the authorities are under threat. What often happens is that officials turn a blind eye and don’t report anything because they are either facing threats or are themselves profiting from the situation,” she says.Hanrine maintains it took appropriate action and requested administrative protection after observing illegal miners within its concessions in late 2017. The company says it still cannot carry out exploration in the area and is not responsible for the illegal miners’ environmental damage.“Any suggestion that Hanrine knowingly condones or participates in illegal, environmentally harmful or abusive conduct is false and categorically rejected,” Hanrine said.‘DEAD DOGS DON’T BITE’As the stalemate between villagers and Hanrine continued after the company’s arrival, tensions escalated.Accounts from local villagers, which were backed in a judicial council report, accuse Hanrine staff of trespassing on private land. On one occasion, workers attempted to build a road without permits through a farm, damaging a waterfall the local family owners planned to turn into a tourist attraction.Local anti-mining advocates say they have been abused, harassed, assaulted and threatened. One claims he was beaten by Hanrine workers while riding a motorbike with his elderly mother, who defended herself from the alleged assailants with a hose. Another received death threats. “Dead dogs don’t bite,” she was told.At one point in 2020, almost 200 people, including members of the Awa Indigenous community, set fire to two Hanrine camps. Chants of “The people united will never be defeated” echoed as the tents burnt. Two months later, some 150 villagers who had marched to Hanrine’s camp on the outskirts of town to demand the company remove its machinery from the parish clashed with police and security forces. In 2022 Ecuador’s national assembly granted an amnesty to 22 locals. The charges stemmed from protests and disputes over territorial rights over to their opposition to Hanrine. The amnesty followed a petition from environmental and rural land corporation APT Norte, which had been raising the alarm about Hanrine’s treatment of anti-mining activists.Tensions boiled over again in January 2023, after locals blocked roads with rocks and debris to prevent military and police personnel travelling with a Hanrine convoy from setting up camp in El Triunfo. Security forces arrested two people in the ensuing chaos, including a disabled elderly man who told this masthead he was thrown to the ground and stomped on by officers before being handcuffed and detained for five hours.“I was a little traumatised,” he says. “All this time I have been alive and they arrest me in this way.”Hanrine has now largely abandoned the parish, but locals are again grappling with the illegal miners who invaded its concessions.Chicaiza is now working with the military to dismantle illegal mines, controlled by Colombian guerrilla outfits that splintered from the Revolutionary Armed Forces of Colombia (FARC). The mines have previously been under the thumb of local thugs, petty criminals and a feared prison gang known as Los Lobos (The Wolves). This masthead travelled to El Triunfo, the last outpost before the steep climb to the illegal mines, last year during an Ecuadorian military operation that sent the illegal miners and guerrillas into hiding. Some fled across parish lines, others sheltered in improvised miner hostels and bars around La Merced de Buenos Aires.Armoured vehicles and military trucks lined the road. Soldiers in army fatigues carrying automatic weapons rested in demolished buildings, once used by the illegal miners. The remains of makeshift shelters burned nearby. The environmental devastation caused by the illegal operations inside Hanrine’s concessions was obvious. Dozens of pitheads covered in plastic sheets scarred the ridges around the community. Tailings spilled down the mountainside, where miners set up ziplines to winch supplies.The 2025 operation destroyed processing plants hidden in the forest, and seized explosives, Colombian guerrilla uniforms, ammunition and hundreds of sacks filled with gold-bearing rock. But it represented only a temporary win.The illegal miners know the army doesn’t stick around. The parish is a small part of the unit’s jurisdiction, which also includes gang strongholds like Esmeraldas and parts of the volatile Colombian-Ecuador border. Resources are stretched and explosives used to dismantle mines are scarce. When the troops peel off, the illegal miners re-emerge. It’s a game of cat and mouse they have played for years.Heredia, the Dentons lawyer specialised in mining contracts, believes it will take years to eradicate illegal mining in Ecuador. “There’s a lot of work to be done – and that goes hand in hand with security issues the country will have to address,” she says.‘A MONSTER OF MANY HEADS’On the 10th floor of a tower with sweeping views of the business district in Ecuador’s capital, Quito, a special unit inside the office of public prosecutions sorts through stacks of documents. Puerto Rican superstar Bad Bunny’s smash hit Voy a Llevarte Pa’ PR plays from speakers. Manila folders containing hundreds of pages of police reports, photographs and other evidence are perilously stacked on desks and chairs, and in cardboard boxes on the floor. The unit, based in a small, unassuming corner office, investigates crimes against nature - including illegal mining. Ecuador, in 2008, became the first country to constitutionally recognise the rights of nature, a move rooted in the Indigenous concept of “sumak kawsay”, which loosely translates as “good living” and refers to the right of communities to live in an ecologically balanced environment.Environmental lawyer Yuly Tenorio inspects documents in Ecuador’s capital, Quito, relating to court cases over illegal mining in La Merced de Buenos Aires.Photo: James Ross.Yuly Tenorio has come to the office to follow up a series of investigations into La Merced de Buenos Aires. They include allegations of water pollution, missing bags of seized gold-bearing rock, and claims that Hanrine carried out drilling works without the right permits.She says most reports of crimes against nature in La Merced de Buenos Aires were filed by locals. She questions what Hanrine has done, besides obtaining administrative protection, to report and prevent illegal mining. “There are no reports from the mining company against illegal miners. It’s all us,” Tenorio says. “Or, at least, we haven’t found out about them.”Hanrine’s decision to challenge in the Constitutional Court the new mining oversight fee does not help its image with locals. Other miners also opposed the measure, which is subject to several constitutional challenges.Hanrine’s general manager, Carlos de Miguel, has previously claimed the company has denounced illegal mining since 2017, “back when there were only about 60 illegal miners working on a small scale”, and says he has been “within metres of the illegal miners” during military operations to dismantle them. He has also accused local environmental groups in La Merced de Buenos Aires of failing to denounce illegal miners and being complicit “behind the scenes”, a claim Tenorio and anti-mining activists in the parish strenuously deny. “We have pursued everything from administrative injunctions to criminal complaints, alongside dozens of formal requests and tireless meetings with every single authority, yet to no avail,” de Miguel told local media outlet El Oriente last year.Despite years of clashes with locals, violence, environmental issues and strong opposition, there is no sign Hanrine will back off.Locals certainly worry the company could attempt to enter its concessions again. Their message for Gina Rinehart is to give up. She is not welcome. “One day she will depart from this world, and where will all her wealth and ego go?” Sulema Armas, farmer and mining opponent from La Merced de Buenos Aires, says. Research by the Global Initiative Against Transnational Organised Crime, an independent Swiss policy research institute, shows illegal mining in Ecuador has exploded in recent years, fuelled by soaring gold prices, weak enforcement, dysfunctional institutions and widespread corruption. In 2018, there were fewer than 60 illegal mines in the country. That number, according to the research, had ballooned to more than 600 by 2024. Illegal mining is estimated to have produced exports worth more than US$1.3 billion in 2024, turning illicit gold into the main source of income for organised crime networks. Ecuador’s Chamber of Mining estimates about half the gold exported out of the country is illegally mined.Unlike cocaine, which can be spoilt and degraded, gold is impervious to heat, water and weather. It is also easy to launder. Once it enters the legitimate supply chain, it’s almost untraceable.“It’s a monster of many heads,” former Ecuador interior minister Mónica Palencia told the media last year. The market is so lucrative, she said, that “you remove a backhoe loader and they purchase another”.Illegal miners in La Merced de Buenos Aires crawl into narrow, muddy galleries to extract the rock, which is then transported out of the mountain using a network of mules and steel pulley systems for processing. Ecuadorian soldiers and firefighters retrieve a dead body from the illegal mines in La Merced de Buenos Aires in June 2026.Photo: Ecuadorian Army.Some ore is processed in rudimentary plants along the Lita River, using toxic chemicals like cyanide to separate the metal from the rock. The rest is processed in other provinces or in countries like Colombia, where “there’s no God or law”, as one official source, unauthorised to speak publicly, put it.Toxic run-off is released into waterways running through farmland and through forests teeming with bears, monkeys and armadillos. La Merced de Buenos Aires township is nestled between subtropical forests and the grasslands of the paramo, a high-altitude alpine tundra ecosystem that acts like a giant sponge by soaking up the run-off from the mountains and slowly releasing it into the lands below. This allows rivers to flow all year round and unique wildlife to thrive in the primary forests around them.Sandro Armas, the president of BUPROE, an environmental group based in the parish, says water analysis carried out by the group has identified traces of heavy metals in the Lita River, which flows through his farm on the outskirts of La Merced de Buenos Aires township. The water is often cloudy and reeks of chemicals.“It fills me with sadness and indignation,” he says. “We need to take care of the environment and the water because it’s life. If we destroy what gives us life, we are killing ourselves slowly with our own hands.” Sandro Armas, a farmer and the president of local environmental group BUPROE, says heavy metals believed to come from illegal mining operations have been detected in the Lita RiverPhoto: James Ross.Armas has repeatedly reported the pollution at great personal risk, but no remediation work has been undertaken. At times, he’s had to report his own family members for collaborating with illegal miners. He worries about the welfare of the Awa community living downstream, and farmers relying on irrigation. Alfonso Cantincus is the president of the Awa in Palmira de Toctemi. He says wild animals and cattle often wind up dead after drinking water from the Lita River, one of only two rivers flowing through their territory. Cantincus says the fish have also disappeared.“They drink the water and die,” he says. “I am worried about my people. With pollution comes illness. I do not want that to happen to our community.”Hanrine maintains it has enjoyed a “long-standing friendship based on mutual respect” with the Awa community, and says it has reverted IMBA 5, the concession encroaching into the Indigenous group’s territory, to the government over its lack of potential.The Awa fear further mining, by Hanrine or the illegal miners, could potentially pollute their only remaining river, the San Francisco. “Mining pollutes, legal or illegal,” Cantincus says. It’s unwelcome in their ancestral lands.