Ecuador's suspension of environmental consultations hits $2 billion of investment -business leaders

By Alexandra Valencia

QUITO (Reuters) - Ecuador's suspension of a decree enabling environmental consultations prior to the licensing of industrial and mining projects has paralyzed investments worth $2 billion, business associations said on Wednesday.

The Andean nation's top court last month suspended the decree from outgoing conservative President Guillermo Lasso after Indigenous group CONAIE argued the processes favored development of mining projects over local communities.

The decree issued in May allowed the consultations for communities in areas close to the industrial and extractive projects to be used to obtain environmental licenses, seeking to speed up permitting.

"Today in Ecuador all industrial activities are shut down," said María Eulalia Silva, president of the Ecuadorean Chamber of Mining. "This means freezing $2 billion in investments for a series of projects."

"As productive sectors we are asking the court to allow us to work," added Silva, who was accompanied by protesting miners and communities affected by the decision.

The Constitutional Court did not immediately respond to requests for comment.

At least 176 environmental consultation processes are currently suspended, including for projects such as mining, waste treatment plants and dams, among others, according to the environment ministry, which called the court's decision "unacceptable."

Environmental consultations, backed by the government, have seen strong resistance in Ecuador's Andean region, where mining companies look to develop a variety of projects.

The Chamber of Industries and Production (CIP) said the lack of environmental consultations prevents new investments.

"This has made the country unattractive to foreign investors," Maria Paz Jervis, president of the CIP, said in a press release sent to Reuters. "Without a doubt one of the economic and productive consequences (...) is the paralysis of employment in formal companies."

(Reporting by Alexandra Valencia; Writing by Oliver Griffin; Editing by Marguerita Choy)