Friday, September 6, 2013

INTERVIEW-Romania gold mine hopes to get parliament approval

By Luiza Ilie

BUCHAREST, Sept 5 (Reuters) - Rosia Montana Gold Corporation believes Romania's parliament will vote in favour of the company's plan to open Europe's biggest open-cast gold mine in a small Carpathian town despite ongoing street protests against the project, its director said.

Thousands of people in cities across Romania took to the streets on Sunday against the venture, which aims to use cyanide to mine 314 tonnes of gold and 1,500 tonnes of silver, and protests have continued in the capital Bucharest ever since.

The catalyst for the protests was a move by the government last week to approve a draft bill allowing the project to go ahead. The bill now needs parliament approval to take effect.

"I believe the debate must be carried through arguments, realities and not emotions or abstract fears," Dragos Tanase, the company's director, said in an interview on Thursday.

"I cannot anticipate parliament's decision, but we hope that if they listen to rational arguments... they will reach a positive conclusion."

RMGC, in which the Romanian government holds a minority stake, is owned by Canada's Gabriel Resources, a firm set up specifically to develop the Rosia Montana gold mine.

Tanase said the vote was not unique, as other large economic projects had passed through parliament, including the sale of the European Union state's largest bank BCR and oil and gas firm Petrom to Austria's Erste Bank and OMV, respectively.


The project has been stuck for 14 years. Last month, the cabinet of leftist Prime Minister Victor Ponta, who opposed it before coming to power in 2012, renegotiated the contract and raised the royalty tax on gold to 6 from 4 percent, and the state's stake in RMGC to 25 percent from roughly 20.

"This royalty level and state participation are unprecedented in the mining industry in the world," Tanase said, adding the law also sets stringent environmental protection obligations, investments and job creation.

RMGC estimates the mine would be worth $10 billion based on a price of $1,200 per ounce of gold. Excluding $3.1 billion for goods and services which need to be purchased abroad, the company and the government estimate Romania would get $2.3 billion in taxes and $2.9 billion in services and jobs, or roughly three quarters of overall benefits over the mine's 16-year lifespan and building and closing periods.

Protesters and NGOs who oppose the mine challenge the estimates. They also oppose a move in the draft bill to give the mine "special national interest" status, which will make it easier for RMGC to expropriate the few locals who oppose the project and who own land needed for the mine.

Critics have said the move is unconstitutional, a view also supported by the justice ministry in a note.

The RMGC mine would have four quarries on four mountains, two of which would expand on the work of a former state mine. It would wipe out three villages and environmental and civic rights groups say it would destroy ancient Roman sites and could lead to an environmental disaster.

Gold traded at $1,381 per ounce on Thursday. Gabriel shares touched a near one-month low earlier this week. (Editing by James Jukwey)

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