Romania risks gaining a reputation as an unscrupulous place to do business, the head of Gabriel Resources Ltd. warned, after the country's environment minister halted the company's plans to build a massive gold mine.
Shares of Toronto-based Gabriel fell as much as 44 per cent yesterday after the review process for an environmental permit for the Rosia Montana gold mine in central Transylvania was suspended.
Alan Hill, Gabriel's president and chief executive officer, called the decision by Atilla Korodi, Romania's environment minister, "arbitrary and illegal."
The review of Gabriel's environmental impact assessment was shut down after a pair of non-government organizations (NGOs) filed a lawsuit challenging the validity of documents the company said are unrelated to the environmental review process.
"This is not rule of law, this is a flagrant ignorance of the rule of law," Mr. Hill said in an interview from Romania.
Mr. Hill contends that the minister is personally opposed to Gabriel developing Rosia Montana and said the decision threatens to derail Romania's attempts to attract foreign investment after enduring decades under communist dictator Nicolae Ceausescu.
"He's making it look like the wild west ... anybody thinking of investing in Romania must be having second thoughts when a minister can make such an arbitrary and illegal move," said Mr. Hill.
Gabriel has been trying to develop Rosia Montana for nearly a decade, but has faced ardent and well-funded opposition from NGOs as well as some members of the government of neighbouring Hungary. Opponents say the mine would poison the environment, displace locals and destroy historic landmarks.
An NGO called Alburnus Maior , a long-time enemy of Gabriel's mining plans, along with Open Society Institute, a group funded by billionaire financier George Soros, have filed a legal challenge to Gabriel's so-called "urbanism certificate." While a court ponders the validity of the document - which simply details the list of documents needed to apply for a construction permit - Gabriel has been left spinning its wheels.
Gabriel had hoped to win approval for its environmental impact assessment by the end of the summer, but now says it doesn't expect the approval until the fourth quarter.
Rosia Montana is believed to be the largest undeveloped gold deposit in Europe, with proven and probable reserves of 10.1 million ounces. Winning the needed approvals to begin extracting the valuable gold, has, however, become a protracted odyssey for the Canadian mining firm.
The NGOs have enlisted celebrities including British film star Vanessa Redgrave to publicly voice their opposition. The mining company has fought back with its owns public relations campaign and has aired commercials on Romanian television in an attempt to convince the public of the project's merits.
The company says the mine will create more than 600 jobs and foster more than €2-billion ($2.87-billion) of activity including nearly €1-billion in direct revenue to the Romanian government which owns a 20-per-cent stake in the project.
Last year, Gabriel even funded an anti-environmentalist documentary titled Mine Your Own Business, that some opponents branded as corporate propaganda.
Mr. Hill has begun taking a different tack of late, raising the issue of Romanian sovereignty.
The executive has noted that Mr. Soros and the environment minister are both of Hungarian descent and has suggested that the fight against the mine is connected to the Hungarian government "with its long-standing interest in Transylvania."
David Stein, an analyst at Cormark Securities, said raising the sovereignty issue is "a good move" by Gabriel. He rates the stock, which pared intraday losses yesterday to close down 21 per cent, a "buy."