Monday, April 9, 2012

Romania backs out of deal to sell copper mine

(Reuters) - Romania has backed out of a deal to sell its biggest copper mine to Canada's Roman Copper Corp, its economy minister said on Saturday, further delaying the country's long-awaited privatisation programme.

Roman Copper won a tender to buy the Cupru Min Abrud mine for 200.8 million euros last month, outbidding Australia's OZ Minerals Ltd, Dutch Dundee Holding, and Bulgaria's Ellatzite Med Ad.

But Economy Minister Lucian Bode said the two sides could not conclude talks on the terms of the deal.

"The state did not want to give up three conditions," Bode was quoted as saying by state news agency Agerpres. "We will relaunch the tender but we will keep the same conditions."

Bode said under those conditions all privatisation contracts had to me made public, payment had to be settled within 30 days and the company had to set up a collateral deposit of 32.27 million euros as a guarantee for environment investment.

"We were surprised that the negotiating committee refused to accept our written signature," said Mike Curtis, partner at Bay Front Capital Partners, the Toronto-based merchant bank that owns Roman Copper.

Cuprum Min has estimated reserves of 900,000 tonnes of copper, or about 60 percent of the European Union state's estimated copper reserves.

Former communist countries across the emerging European Union have sold state holdings, but Romania's persistent failure to do so has left a huge, inefficient state sector in the bloc's second-poorest economy.

Earlier this week, a Romanian court annulled a zoning plan in a decision that may further delay a Canadian project to set up Europe's largest open-cast gold mine in the Carpathian town of Rosita Montana - near Cuprum Min's Rosia Poieni mining area.

Rosia Montana Gold Corporation, majority-owned by Canada's Gabriel Resources Ltd, aims to use cyanide to extract 314 tonnes of gold and 1,500 tonnes of silver. Its project has dragged on for 14 years and still needs an environmental permit.

Bucharest agreed to an ambitious programme of selloffs under a 5 billion euro International Monetary Fund-led deal struck in 2011 but flunked a major test last year, failing to sell a minority stake in its top oil and gas group Petrom. (Editing by Karolina Tagaris)

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