Rosia Montana Gold Mine – Pros and Cons / The Diplomat November 11, 2011

Source: The Diplomat
November 2011

Despite President Traian Basescu’s support for the controversial Rosia Montana mining project, Rosia Montana Gold Corporation still has to clear further hurdles from the cultural and environment ministries, as The Diplomat – Bucharest learned. By Dana Verdes

The Rosia Montana project seems to have become a never-ending saga. While the disputed mining scheme has earned the expressed support of President Traian Basescu, the tortuous story seems no closer to reaching a conclusion.

During a visit to Rosia Montana, the president stated: “I am a supporter of the project – not from now, not since today or yesterday, I was also here during the election campaign.” He argued that Rosia Montana Gold Corporation (RMGC), a company controlled by the Canadian firm Gabriel Resources, has to exploit the gold because the Romanian Central Bank needs it to complete its reserve and it is his duty as president to lead the country to financial safety. But despite the president’s support, the project has not received the final permits from major ministries.

A mountain to climb

Kelemen Hunor, culture minister, told The Diplomat – Bucharest in an interview that for the project to get the OK, Carnic Mountain has to be stripped of the protected status it enjoys under Romanian law.

“In keeping with the existing legislation, the National Institute of Archaeology is examining the dossier submitted regarding the archaeological research. The case was filed in August last year and after a year the committee gave notice of archaeological discharge this summer. The next step is downgrading Carnic Mountain, as it is currently ranked in category A on the list of historical monuments, with an enhanced level of protection,” says Hunor.

According to him, the ministry has prepared the necessary documentation for the approval of the downgrading file, which has to be followed by the minister’s order. “I haven’t signed the approval or the order. Carnic Mountain enjoys enhanced protection and without downgrading its category no work can be started. Meanwhile some documents were challenged in Court and until this ends I do not want to get into another discussion on downgrading the monument,” adds Hunor.

Plan B

“When we saw the commission’s position – when we received the Rosia Montana file last year – we realized in what direction the whole story was going. Most likely they will agree with the downgrading. Then I tried to establish a format and some guarantees for any eventuality. When the operations begin, if the project starts, I will have the certainty that I have the necessary funds from the investors to protect the cultural heritage of Rosia Montana,” says Hunor.

The National Institute of Heritage has signed a deal with the RMGC. This agreement stipulates USD 70 million to protect the cultural heritage of Rosia Montana and another USD 70 million for a countrywide program for the restoration of national monuments, all of which are suspended until the project actually starts.

“I’m not going to sign the downgrading order until I have a final court ruling related to the downgrading notice and until there is a very serious discussion in the government because this project must be signed by the entire governmental team. The answer could be no,” says the minister.

In his opinion, if no decision is taken and nothing is done at Rosia Montana, an environment tragedy could happen at any moment, the cultural heritage would be destroyed and the community condemned.

He tells The Diplomat – Bucharest that the company’s committed investment to cultural preservation is a significant amount, compared with the average USD 15 million annual budget the ministry gets for its national restoration program, but clearly cannot be compared with how much money Italy or other European countries spend on the protection of their cultural heritage.

Environment Ministry lays down the law

Ministry of Environment officials told The Diplomat – Bucharest that they will recommend the government approves the Rosia Montana project only if the investor follows best practices in the mining sector.

“I’ve asked the Rosia Montana Gold Corporation to meet two important conditions: to reduce the percentage of cyanide to a level that will not pollute the natural environment, as happens in Sweden, and to give money for renaturation, in the early years of operations,” says the minister, Laszlo Borbely.

At European level, the maximum permissible concentration of dissociable cyanide in a weak acid environment is 10 ppm. The Ministry of Environment notified the RMGC in mid-August this year that the value proposed by the investor of 5 ppm at the point of discharge into the water is not acceptable, and asked the company to present solutions to reduce the concentration to levels that pose no danger to the environment.

Moreover, in January this year, the Ministry of Environment in Hungary submitted to the Hungarian Government the documents presented by the RMGC, following the request of the Ministry of Environment to update the environmental impact assessment and provide answers to questions received from Hungary. Hungarian officials submitted its response, rejecting the Rosia Montana project, on August 3 this year.

RMGC gives guarded response

Rosia Montana Gold Corporation officials refused to respond to The Diplomat – Bucharest‘s questions. However the company has made several short statements in the international media. It has protested that reducing the level of cyanide in mining lake, as requested by the Romanian Government, would cost the company “tens of millions of dollars,” said Horea Avram, VP for environment at RMGC, in an interview with Agence France-Presse.

In early September, Cecilia Szentesy, technical director at RMGC, said the cyanide concentration levels could be reduced to 3 milligrams per liter. “Following the request that came from the ministry, we discussed with our experts and analyzed the possibility of using a maximum concentration of 3 milligrams per liter. Obviously, this will involve substantial costs. We are talking about tens of millions of dollars,” said Avram.

The project seems to be having difficulties not only at a bureaucratic level. Victor Ponta, Social Democrat Party leader, said recently that the Rosia Montana project is and will continue to be blocked, as not all politicians can be bought off,” like President Basescu has been.” It remains to be seen what the next chapter of the long-running story will be, especially with the 2012 elections around the corner.

Rosia Montana: the story so far

Gold and silver exploitation at Rosia Montana would be carried out by the Rosia Montana Gold Corporation (RMGC) company, controlled by Canadian firm Gabriel Resources, which currently owns 80.46 percent of the share capital. The Romanian State, through Minvest Deva, has a 19.31 percent stake in RMGC. Among the names linked with the Canadian company are billionaire businessmen such as John Paulson, Beny Steinmetz and Thomas Kaplan. Gabriel Resources was founded in 1997 by controversial Romanian businessman Frank Timis, who retired from the company in 2003 to focus on other businesses. In 1997 Minvest had a 33.8 percent stake, and Gabriel Resources, which at that time was named Euro Gold Resources, 65 percent. The Romanian State issued the exploitation license for gold and silver at Rosia Montana in June 1999 approved through Government decision 459/1999. One year later, the State transferred the license from state-owned company Minvest Deva to private firm RMGC. But the RMGC has not managed to convince the Romanian State and the different ministries over the years, and has still not received the necessary permits for the exploitation. Another hurdle the RMGC has had to face is the public’s opposition, as cyanide will be used in the process. The Rosia Montana deposit is evaluated at approximately 300 tons of gold and 1,600 tons of silver.