Andes Mendiak Exploration Corp.: Navigating Ethical Challenges in Ecuador's Mining Sector

<p style = "color:rgb(197,183,131);"> <strong> AWARD WINNER - 2024 Fox International Case Writing Competition</strong> </p><br>In 2018, Andes Mendiak Exploration Corp., a Canadian-listed junior mining exploration company that specialized in gold and copper, was facing significant ethical and operational challenges. The company was operating in Ecuador, a country with stringent environmental regulations, bureaucratic inefficiencies, and prevalent corruption—especially in the illegal mining sector. The company’s commitment to sustainable and ethical practices put it at a disadvantage, in a market where illegal miners operated with impunity, often with the tacit approval of corrupt officials. The strict and illogical regulatory environment disproportionately targeted mining companies, even when their activities had minimal environmental impact, compared to unregulated sectors such as agriculture. The country manager of Andes Mendiak Exploration Corp. was grappling with a critical dilemma. Should he strictly adhere to rigorous ethical standards and risk financial losses and delays? Or should he agree to engage in unethical practices, such as the so-called “facilitation fee” payments, to expedite operations?

This case is appropriate courses on business ethics, international business, corporate governance, strategic management, and environmental management at the undergraduate and graduate levels. It can be used as an introductory discussion on ethical dilemmas or a more advanced exploration of strategic approaches to ethical challenges. The case highlights real-world ethical dilemmas faced by companies operating in emerging markets with complex regulatory and economic circumstances. It provides an opportunity for students to critically examine the broader implications of decision-making when ethical integrity conflicts with operational efficiency and competitiveness. After completion of this case, students will be able to <ul><li>identify and evaluate ethical dilemmas related to compliance, corruption, and community engagement in international business operations;</li><li>assess the impact of ethical decision-making on a company’s competitiveness and long-term sustainability;</li><li>develop strategies for maintaining ethical standards while effectively engaging with local communities and dealing with regulatory challenges;</li><li>understand the complex trade-offs between profitability, ethical integrity, and stakeholder management in emerging markets; and</li><li>recognize the role that inconsistent regulatory frameworks play, how they affect industries differently, and their disproportionate impact on ethical companies.</li></ul>

• Business ethics
• Strategy
• Mining
• Ecuador
• Latin America LATAM
• International Business