Ecuador's Energy Ministry has announced a $1.7bn mining agreement with the local subsidiary of China's CMOC Group for the Los Cangrejos project in El Oro province.

The initiative, managed by CMOC’s ODIN Mining del Ecuador, is anticipated to contribute $4.39bn in state revenue via taxes, royalties and fees, reported Reuters.

Under the terms, the Ecuadorian state will hold a 50% share of the project's value.

The country is set to receive advance royalties of $54m, with an initial $34m paid at the signing.

Subsequent payments depend on construction milestones such as the commencement of the processing plant and mining activities.

Development in Ecuador’s mining sector has often been hampered by community opposition, legal battles and regulatory changes.

Currently, the Fruta del Norte gold mine and the Mirador copper mine, both operational since 2019, are the only large-scale mining sites in the country.

The agreement highlights China's expanding role in Ecuador's developing mining sector, even as President Daniel Noboa, who has connections to US President Donald Trump, faces US pressure on Latin America to distance itself from Beijing concerning critical minerals, reported Bloomberg.

The sector has faced regulatory challenges for several months.

In March, Jiangxi Copper in China acquired SolGold, which is involved in a significant gold and copper project in northern Ecuador.

Chinese companies manage the majority of Ecuador's forthcoming mining projects over the next decade.

They have also expanded their control over Ecuador's copper reserves to two-thirds and strengthened their position in gold reserves by acquiring Western junior miners.

President Noboa plans a second official trip to Beijing in August.

In a recent statement, he emphasised the need for Ecuador to maintain diverse trade connections to prevent over-dependence on any single country.