Tuesday, September 3, 2013

Europe’s Biggest Planned Gold Mine May Face Romanian Referendum

Bloomberg NewsBy Irina Savu September 02, 2013

Romania’s President proposed a vote on allowing development of Europe’s largest gold mine project following protests against technology that made the country home to one of the continent’s worst environmental disasters.

A day after thousands of demonstrators rallied against the use of cyanide in gold mining, President Traian Basescu said he may call a referendum next year on the Rosia Montana mine. That may delay the project, for which Canada-based Gabriel Resources Ltd. (GBU) said it could “hopefully” receive approval by November.

The rallies followed the government’s unveiling last week of a draft law to raise the state’s stake in the project, rekindling anger over the 2000 Baia Mare spill. Listed by the United Nations Environment Programme alongside Chernobyl as one of Europe’s major human-caused disasters, the spill happened when a dam holding back mine debris burst, flooding the Somes, Tiza and Danube rivers with tens of thousands of tons of cubic meters of cyanide-contaminated water.

“The biggest scare about the Rosia Montana mine is the cyanide process, which should have been discussed with experts,” Basescu said on newspaper Adevarul’s website. He said “society is rightfully reacting to this” because Romania had suffered from the Baia Mare spill.

Prime Minister Victor Ponta showed similar support, saying in a televised speech today from Bucharest that a referendum was “a good idea,” after the government had finished the “technical negotiations” on the project. The project is subject to a final decision by parliament, Ponta said.
Gold Reserves

Last month, Gabriel Resources said if parliament adopted the bill -- which increases the state’s stake in the mine to 25 percent and raises its royalties by half to 6 percent -- in a session that begins today, it would be able to accelerate its development of Rosia Montana and other mining projects.

Gabriel expects to get parliamentary approval as soon as November, Chief Executive Officer Jonathan Henry said today in a telephone interview with Bloomberg.

“Hopefully it could be a two- to three-month process,” Chief Executive Officer Jonathan Henry said today in a telephone interview. “It’s a little bit undefined.”

“We are hopeful that it will be smooth process to approval and it will be a fast process to approval. We’ve been waiting a long time and need to get on with things.”

Basescu said a referendum may take place during European Parliament elections next year. Such a vote would need a minimum turnout of 50 percent to be valid, a difficult prospect in a country where voter participation is historically low.
Opposition Rising

With proven reserves, estimated by Gabriel, of 10.1 million ounces of gold and 47.6 million ounces of silver, Rosia Montana is worth about $15 billion, or a 10th of Romania’s annual output, according to today’s spot price of the metals and World Bank data on the size of Romania’s economy.

The company, which has spent about $400 million and more than a decade trying to develop the gold mine, says it will be Europe’s biggest when it is operational.

The draft law has stoked opposition. About 2,000 people took to the streets in Bucharest yesterday and hundreds protested in big cities across the country against the project, Mediafax news service reported today.

Non-profit organization Alburnus Maior, one of the protests’ organizers, said in an e-mailed statement they had filed a request to the government today, asking for the “immediate rejection of the draft law by parliament” and “the immediate ban of the use of cyanide in mining.”

The mine may produce an average of 375,000 ounces of gold a year and cost $1.5 billion, Stephen Walker, a Toronto-based analyst at Royal Bank of Canada, said on Aug. 28.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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