Friday, February 26, 2010

FT: Environmentalists protest as miner goes for gold in Romanian mountains

By Chris Bryant in Vienna

Published: February 26 2010 02:00 | Last updated: February 26 2010 02:00

Beneath the sleepy village of Rosia Montana in the Apuseni mountains of western Transylvania, the weathered soil holds a gleaming secret.

Around 140km of tunnels bear testament to centuries of effort to win riches from these rocks.

The pickaxes and drills fell silent in 2006 when the last state-subsidised mine was closed in preparation to join the European Union. But Gabriel Resources, a Toronto-based mining company, estimates there are still 10.1m ounces of gold at Rosia Montana, making it the richest untapped seam of gold in Europe.

With an economy in severe recession and gold prices in the ascendant, Romanian politicians are considering whether mining this gold might help reverse a sharp fall in tax receipts and unblock a freeze on foreign investment.

Digging up Rosia Montana's riches is not a foregone conclusion, however, owing to a decade-old campaign by environmentalists who say cyanide used to mine the gold could cause an ecological disaster.

The words "Baia Mare" are never far from campaigners' lips. On January 30, 2000, a dam containing cyanide tailings gave way, sending 100,000 tonnes of contaminated water into tributaries of the Danube. It killed more than 1,000 tonnes of fish and contaminated farmland and drinking water for miles around.

Ten years on, it is hard to find a Romanian who does not have an opinion on Rosia Montana. The project was in limbo after the environment ministry in September 2007 suspended a review of the environmental impact assessment, after a row about minor but vital documentation.

But the formation of a new government last December has put the matter back on the agenda.

"I want this project to start as soon as possible," Adriean Videanu, economy minister, said in December.

Asked about Rosia Montana at a recent investor meeting in Vienna, Sebastian Vladescu, finance minister, told the Financial Times: "In my opinion we need investors . . . If, from an environmental point of view, things can be clarified, then we will be supportive of all kinds of investment that will help us to clean [up] Romania. And I'm sure this will be also be a strong impulse for development of the mining sector and for growth."

With gold at $1,095 an ounce, Gabriel Resources claims mining the concession could generate $4bn for the Romanian economy over the 16-year lifespan of the project, while reinvigorating a beleaguered industry.

Before the fall of the Iron Curtain, Romania's mining industry employed 350,000 people. But by 1997, the number had halved as uneconomic mines were closed. Since then, tens of thousands of additional workers have lost their livelihoods as mining subsidies have been phased out.

The impact on single-industry towns such as Rosia Montana has been severe; unemployment in the area stands at more than 80 per cent. If it was allowed to tap the subterranean bounty, Gabriel Resources says it would create more than 800 jobs for local people who it claims are overwhelmingly in favour of the project.

The company argues that a modern tailings facility would prevent a repeat of the Baia Mare disaster. It also promises to clean up this highly polluted area .

But these arguments have not won over non-governmental organisations, which cast Gabriel Resources as a company out to make a quick buck at the expense of the environment and the community.

"It isn't even a Romanian company, it's a Canadian company, so I don't see how this can be in Romania's interest," says Lucian Simion, a campaigner at Greenpeace in Bucharest. "They want to destroy four mountains in the area [through open-cast mining] to take all the gold from it."

Richard Young, finance director of Gabriel Resources, says Rosia Montana is less about short-term profit and more an important test of the mineral-rich country's openness to foreign investment.

"Until this project starts to move forward, other mining companies are not going to risk their mining dollars.

"Mining has a negative legacy in eastern Europe from the communist period. What we're saying is, maybe mining isn't so bad."

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