Report by Michael Bird and Ana Maria Nitoi
March 2010
“This project affects my entire life in the Rosia Montana valley because I will have to leave my house and everything I know and own,” says landowner Eugen David.
Married to a local from the village and with one daughter, 45 year-old David and his family own a house and land on the planned platform of a billion-dollar gold-mine in Alba county, Transylvania.
“If the project goes ahead, it will pollute the environment where I will have to live,” he adds.
Behind the project is the Rosia Montana Gold Corporation (RMGC), 80 per cent owned by Toronto-listed company Gabriel Resources and 20 per cent by Romanian state mining company Minvest. Shareholders in Gabriel Resources include gold producer Newmont and diamond giant the Beny Steinmetz Group.
Critics of the project argue that to extract the gold, RMGC will detonate mountains in two valleys, create a lake polluted with diluted cyanide and relocate around 400 families. David says the mine is opposed by 50 other residents in the region - many of whom can hold back the bulldozers by staying in their houses, because the Canadian-listed company has no power to expropriate property.
Rosia Montana is a remote hilly and forested area with a 2,000 year history of mining and has been plagued by pollution from Communist-era mineral extraction. A major obstacle to the area’s redevelopment, David believes, is that in 2002 the area was declared a mono-industrial zone by the Government. This established that the only major industry which could take place in the area was mining, arguably preventing any alternative. “The local council did not ask its citizens whether they wanted this or not,” he says. “We consider this economic blackmail from the company and from the state.”
Due to the promise that the region’s only future lies with the new mine, David says the community has been “destroyed”. The area now suffers from over 80 per cent unemployment.
However Cristian Albu, a resident of neighbouring town Abrud and leader of the union working for RMGC, says the new gold and silver mine has widespread local support. “I do not think that the community is divided because very few locals are against the project,” says Albu. “We cannot say that there is strong opposition.”
The company’s argument is that Rosia Montana is a mining area which must build on this heritage with modern extraction techniques – even if these use cyanide. “The main reason we want this project to start is because most men in this area are miners and mining is the only thing they know how to do,” Albu says.
Although locals such as David plan to open a guest house and a backpackers’ hostel has appeared in the area, the valley is not a national park nor a popular location on the Romanian tourist map.
Albu argues that the project will revitalise an area which has failed to see benefits from Romania’s post-Communist development. Many locals have been jobless for four years and have lost rights to all state benefits. It is a bankrupt town. Around 2,500 locals could be hired for the two-year construction of the mine and a further 600 in extraction and refining. Hundreds of others could be employed in supporting industries that surround the mine, such as drivers, caterers and hoteliers.
The project started up in 2002 and planned to begin construction in 2006. But for eight years the Canadian group has been attacked by a tough civil society campaign, launching an arsenal of legal challenges, which has seen the project move no further than the floor of a court room.
But this could change because the new Government has given public support for the mine.
With gold prices hitting record highs while the Romanian budget is propped by by 20 billion Euro in loans from the EU and the IMF, the development of the Rosia Montana project is now a strategic priority for the ruling Democratic-Liberal Party.
Cyanide fears
The project will industrialise around 200 hectares of land including natural landscapes, a village, two churches and existing mines. RMGC will blow up mountains, put rocks into a truck, and then crush and douse them in a bath of cyanide on a concrete platform.
This cyanide comes in the form of brickettes which the firm will truck into Transylvania weekly. The cyanide is liquefied and acts as a magnet to attract the gold and silver out of the rock. The residue is then detoxified, before being deposited in a lifeless slurry of mud and water near the mine.
The detonation of four mountains and the creation of what protesters call a “cyanide lake” are among the most emotive issues at stake. “Environmentally, this project is simply murder,” argues Romanian Liberal MEP and human rights lawyer Renate Weber.
Mines in Europe operate also use cyanide under strict EU directives, but Weber argues not on such a large scale. She says this project will be an “ecological time-bomb” for the population.
But this ‘cyanide lake’ is more like a dead marsh of diluted heavy metals. General manager of RMGC Dragos Tanase says the percentage of cyanide in its water will be around 30 per cent of cyanide naturally occurring in a cup of coffee. “If someone tripped and fell in, nothing would happen,” he adds.
Tanase also says RMGC is not wiping out mountains, but cutting a piece from a mountain and putting part of it back afterwards. He argues that once the firm finishes exploiting one pit and starts another, it will rehabilitate the exhausted pits. Afterwards it will replant the area and turn one of the four pits into a lake.
Eviction worry
The mine will flatten the village of Rosia Montana and RMGC is now building two replacement housing developments in its place.
“It would cause complex and irreversible damage to Rosia Montana and the larger area of the Alba county,” argues Weber, “such as social dissolution of local communities, forced displacement of local land owners, devastation of unique cultural heritage and massive environmental destruction.”
The company has bought or has the option to buy around 800 properties - 85 per cent of those necessary - and still needs to buy a further 98 on the site. RMGC is building a new village called Piatra Alba in the vicinity and also constructing houses in the nearby town of Alba Iulia, where 200 people will move. The company has handed villagers the keys to 115 new homes so far.
“Several people say they do not want to leave,” says Tanase. “We still have 250 buildings and land to acquire.” The company says it is working through ‘public consultation’ to find a resolution to buy houses on the project footprint.
But if one person on the site does not want to give up their property, it will be hard, perhaps even impossible, for the project to begin. Expropriation is not an option because the project is not one of national public interest, such as a motorway or air strip.
In 2007 then CEO of Gabriel Resources, Alan Hill, told The Diplomat: “The only case in which expropriation could happen is if the home-owner is trying to screw the company by holding out for an inflated price for their property.”
But such a move would be illegal and current general manager Tanase distances himself from this option. “Expropriation is not something the company can do,” says Tanase. “We must discuss with the community.”
Political dilemma
Now the project does not have permission to begin. Alba County itself is a stronghold of the Democratic-Liberal Party (PD-L), which voted for the winning candidate, Traian Basescu, in the 2009 presidential elections. His Social Democratic (PSD) opponent Mircea Geoana was against the mine, while Basescu argued in favour of deferring to the opinion of experts, stating this is “not a political, but a technical issue”.
The PD-L favours the project, raising concerns that RMGC helped fund Basescu’s re-election campaign. Pressed on this issue, and asked whether any affiliates of RMGC had funded Basescu, Dragos Tanase denies any engagement in politics by cheque-book. “[The firm deals in] no bribes, no political contributions, no illegal payments and no kickbacks,” he says.
However an opponent of the project is the Union of Democratic Hungarians (UDMR), the PD-L’s partner in Government. The UDMR now runs the key Ministry of the Environment, under Minister Laszlo Borbely.
This Minister will need to be objective in his assessment on whether to approve the mine. If he supports the project, NGOs will accuse him of selling out nature to big business. If he opposes the project, he will be viewed as putting his party’s needs before those of a bankrupt region. Borbely has a tough balancing act to perform.
“Even if [Rosia Montana] will be preserved, it will remain an empty town with no ecosystem,” Borbely has said. “If this project will comply with all regulations, which I do not believe will happen, the entire Government will have to assume responsibility to go ahead.”
This indicates a break from the UDMR’s total opposition to the project, but keeps the door open for activists to prove the damaging consequences of the mine. “The first condition is to make sure that this project does not pollute and at present we do not have this guarantee,” Borbely told The Diplomat.
Even the most environmentally responsible mining project will include teams of trucks, gas-guzzling machinery, loud noise, clouds of dust and the levelling of land. It cannot fail to pollute. Has Borbely set an impossible task?
Once the project starts, RMGC says it will clean up 12 million litres of acidic waters in the Abrud river, polluted from decades of irresponsible mining. The firm will build a dam, collect the water and then recycle this through its plant – which will include a water treatment facility. It will then dump the clean water into the river. RMGC also states it will plant 1,000 hectares of forest to compensate for the vegetation it will displace. In this 35 million Euro ‘pollution offset’ programme, the company hopes it can convince the Government that there may even be a net benefit to the environment if the project is approved.
The Avatar defence
Opposition NGOs have three major tools of firepower - celebrity endorsements, public education and the inconsistent Romanian courts, but not public protest. “Demonstrations are good for public awareness, but politicians don’t care about demos – they are in the paper one day and not the next,” says NGO activist for opposition association Alburnus Maior, Stephanie Roth. “We will pursue binding court decisions and educating the public.”
In the past, the movement against the project has attracted the interest of left-wing and green celebrities. UK actress Vanessa Redgrave and Splash and Kill Bill star Daryl Hannah have bought square metres of land in Rosia Montana to save it from demolition.
Also on the side of the opposition cause is the biggest grossing movie of all time - Avatar. James Cameron’s epic story of noble blue-skinned savages, the Na’vi, against a multinational mining group bent on shooting up nature in the pursuit of profit is now a touchstone for anti-mining campaigners worldwide.
Representatives of east India’s Dongria Kondh tribe have appealed to Cameron to help them stop UK mining firm Vedanta Resources from opening a bauxite mine under the villagers’ sacred mountain. Meanwhile protesters against the security wall between Israel and the occupied territories have painted themselves ‘Na’vi blue’ to evoke parallels between the plight of Palestinians and those of the alien jungle warriors.
One former manager for Rosia Montana told The Diplomat: “Avatar may be the best weapon opposition NGOs have.”
Questioned on the Avatar parallel, activist Stephanie Roth indicated to The Diplomat that she may be getting in touch with James Cameron to try and sell him a piece of land from the village.
“I have not seen the film,” says RMGC general manager Dragos Tanase, “but every friend of mine who has seen Avatar calls me and says ‘Dragos - you should watch this!’”
But the mining boss says it is an “offence” to the local community to make such comparisons. “There is a huge difference - 95 per cent of people in the area affected want our plan to happen,” he adds. “This community is a mining community. The Na’vi does not want its mining project.”
Who decides?
To gain permission to build the mine, the company has two distinct channels of permits to obtain. The ‘non-political’ route is the land-planning permission. First the company needs an urbanism certificate, which details all the approvals necessary to apply for a construction permit. As we went to press, the company did not have this.
The ‘political’ route is the environmental permit. Since 2006 an Environmental Impact Assessment - which outlines the costs and benefits of the project to the local area - has been in the hands of the Ministry of the Environment. This is the basis for a panel of experts, the Technical Assessment Committee (TAC), to issue a recommendation on whether to allow the project an environmental permit. The Romanian Cabinet then votes on whether to issue this permit. As we went to press, lawyers were arguing over whether the project needs an urbanism certificate to start the process of appointing a TAC. This procedural hiccup is holding up the process.
If the TAC begins its consultations, Tanase says it will take six months to one year to get all permits required. At the earliest the project could start construction in 2011.
President Basescu has also said the National Security Council (CSAT) will give an opinion on whether the project should start. CSAT is the board that decides if the USA should have a missile base in Romania or how many troops to send to Afghanistan. It is a body which rarely concerns itself with Canadians digging a big hole in a village.
This declaration surprised Gabriel Resources. “From a formal procedure, the CSAT does not have a role in permitting this project,” says Tanase. But the involvement of CSAT is controversial, because its debates occur behind closed doors.
“I don’t think a private gold mine has anything to do with national security,” says Roth. “It is very untransparent.”
Who is for?
The majority of the locals
Rosia Montana Gold Corporation (RMGC) states around 90 to 95 per cent of the community and the local council is in favour of the project going ahead. But the project needs consent from all the landowners on the site of the mine before it can begin construction.
The Democratic Liberal Party (PD-L)
Minister of the Economy Adriean Videanu wants to incorporate the project into the Government’s strategic programme. His Ministry is in charge of the exploitation of Romania’s mineral resources, while Videanu’s family owns a multi-million Euro stone importer in Hunedoara county, a few miles from Rosia Montana. The PD-L as a party backs his view. President Traian Basescu states he is impartial.
Some National Liberals
National Liberal (PNL) MEP and lawyer Norica Nicolai, the leader of Romanian Liberals in the European Parliament, favours the project. Fellow PNL MEP Adina Valean has carefully phrased a positive perspective on the mine. “If the project is viable, we should profit the most from its benefits and if not, Romania’s answer to the investor should be a professional one and should respect the law,” she told a seminar in Brussels. Valean is married to PNL President Crin Antonescu, who has stated: “In the past, the PNL has been against this project, but we have not discussed about this topic for a long time.”
EU mineral resources policy
The EU is moving towards securing and exploiting its own mineral resources, as opposed to shipping them in from volatile developing countries or emerging markets such as Brazil and Mexico. This includes a raw material initiative plan to encourage production and streamline of the permitting process, especially in metal extraction. The EU passed a new mining directive in 2006 and the day of the drill may be returning to the continent with more earnest.
Who is against?
The majority of Romanians [probably]
This is speculation. In the past, many polls brought to the public have seen the project gain a negative reaction from Romanians. Mines do not tend to be popular, especially those which use cyanide, even if the use of the chemical in the process of extraction is technically safe. The last major survey was undertaken in 2008, when an IMAS poll, commissioned by NGOs against the project, found 67 per cent of Romanians polled were against the use of cyanide in mining – which de facto made them against the project.
Parties the Social Democrats (PSD) and Democratic Union of Hungarians (UDMR)
PSD MEP Daciana Sarbu, wife of new PSD party leader Victor Ponta, has been the most vocal critic of the project in the European Parliament. Meanwhile PSD Senate President Mircea Geoana also opposes the project. The UDMR, the second party in Government, believes local residents have not received the correct information about the implications of the mine and suspect that when RMGC starts the project, it will not conform to EU mining requirements. Ex-presidential candidate for the UDMR and now Minister of Culture Kelemen Hunor told The Diplomat last year: “I am and will be against this project.”
Some Liberals
Human rights lawyer and National Liberal Party (PNL) MEP Renate Weber opposes the project. She told The Diplomat that a major reason is RMGC’s historic behaviour towards the locals. “The company has transformed a poor community overwhelmed by worries from one day to the next to a world in which brothers no longer speak with one another, parents do not speak to their children and neighbours do not speak to one another,” she says.
A large proportion of civil society
Opponents include the Romanian Academy, novelist Mircea Carturescu, the Soros Foundation, cyclists of Cluj-Napoca, and an association whose name is literally translated as ‘To Beat the Saddle to Make the Female Horse Understand’, from a Romanian proverb. The Romanian Orthodox Church has refused to sell its properties in the affected area. Its leadership has declared its position against the mining project, “hoping that this area will remain intact in its holiness, purity and beauty”.
Two churches will need to be destroyed to make way for the mine and RMGC will build two new Orthodox churches. RMGC general manager Dragos Tanase argues the church will have to listen to the views of the locals. “The custom is that the church follows the community,” he says. The Romanian Academy of Scientists has announced that it “does not consider this a public utility project and consequently its negative collateral effects are not justified”.
Hungary
Hungary is against the project due to a historical attack on its fish. In 2000 a mine in Romania’s Baia Mare emptied cyanide into a river which flowed 50 km into Hungary, killing thousands of aquatic creatures. But RMGC says the concentration of cyanide in the lake will be, at most, fifty times less than the figure from the Baia Mare accident and well below all international requirements. Since then Hungary’s Parliament has also passed a law banning the use of cyanide in mining and is lobbying to extend this ban to the EU.
Wild animals
Although the Alba-based association for ‘Apuseni Dogs & Cats’ has declared support for the mine, the Romanian Bat Association, the Romanian Herpetology Association, the Romanian Ornithology Association and the Romanian Lepidopterology Association have signed documents against the project. According to the human representatives of the animal kingdom, canines and felines support the mine, while frogs and bats, birds, butterflies and moths reject the project.
Mine Facts
- Rosia Montana mine has the tenth largest undeveloped gold deposits in the world and could be the largest gold mine in Europe. Around 10.6 million ounces of gold reserves [worth 8.67 billion Euro] and 52.3 million ounces of silver [worth 615 million Euro] could be excavated
- Since 1995 Gabriel Resources has invested around 300 million Euro in Rosia Montana. The company will need around 750 million Euro to construct the mine. It will fund this through debt and equity. State-owned firm Minvest has a 20 per cent stake in project, but will make no investments.
- From taxes, dividends and royalties and money for Romanian suppliers and labour, Romania stands to gain around 3.1 billion Euro over 20 years from the project.
- The mine will take two years to build, will be in operation for 16 years and then there will be seven years of clean-up.
- The project will generate around 3,000 jobs in Romania during its operation. At present, RMGC has 169 employees.
History of obstruction
1990s
In 1995 Gabriel Resources is founded by Romanian mining entrepreneur and controversial businessman Frank Timis with eight million Canadian dollars. It is listed on the Toronto Stock Exchange. Meanwhile state-owned firm Minvest operates the gold mine in Rosia Montana between 1989 and 2006, when it closes because of its failure to conform to EU regulations. In 1999 Gabriel Resources gains a mining license.
2005
Strong opposition against the mining project causes Gabriel Resources to step up its lobbying presence in Romania. The new CEO of the company, Alan Hill, tells an audience at Bucharest′s Hilton in October that “Frank Timis is a dirty word”, indicating an end to the involvement of Timis. Later, Timis complains that the Romanian media has discredited him, due to a number of reports concerning his oil business activities. He states he has sold his remaining 14 per cent stake in the company.
2006
UK actress and left-wing activist Vanessa Redgrave grabs headlines by condemning the project. She shows solidarity by purchasing a strip of land where the mine is planned, urging others to do the same. This is meant to obstruct any mining company wishing to purchase people′s land, but is a more of a gesture.
That October Redgrave is guest of honour at the Bucharest Hallowe′en Ball, which raises money for local NGO Ovidiu Rom′s child poverty alleviation programmes. For charity, a dance with Redgrave is slated for auction. The bidding starts at a feeble 500 Euro, but Redgrave, keen to use her pride at the service of a charitable cause, states: “I will not dance for less that 10,000 Euro.”
At the event, Gabriel Resources′ then corporate affairs manager, Irishman John Ashton, pitches in 10,500 Euro for the dance. The bidding stops. While waltzing with the British actress, Ashton tries to convince her to come to Rosia Montana, telling the Socialist activist how the local miners′ unions are supportive of the project and how his company will take care of the people and heritage.
Redgrave has still never visited the site. But since then Daryl Hannah has bought a piece of land.
September 2007
RMGC receives a letter from the Ministry of the Environment and Sustainable Development (MESD) stating that the review of the Environmental Impact Assessment (EIA) is on hold. This document is the basis for an independent board of experts – the Technical Assessment Committee (TAC) - to make a recommendation to the Government on whether to allow the project an Environmental Permit. The hold-up is due to a court challenge by an NGO opposed to the project over the questionable validity of an urbanism certificate of RMGC. This certificate is a document detailing the list of other documents a developer needs to apply for a construction permit. The Ministry says the meetings of the TAC cannot continue without the company having a valid urbanism certificate. Thus begins a messy court battle which lasts two and a half years.
November 2007
RMGC files a lawsuit against the MESD, as well as the Minister of the MESD Atitla Korodi and his state secretary. Later Korodi states that using cyanide in mining is too dangerous for Romania. “We cannot allow there to be more high-risk areas which have deposits of mining wastes including a high concentration of cyanide,” he argues.
RMGC takes the Ministry and the Minister to court for the “illegal suspension” of the project. “The fact that the company decided to sue not just the Ministry but also me, the Minister as person, is harassment. It was not a personal decision,” Korodi told The Diplomat in February 2008. Korodi wins the first round of the court case, an appeal is still pending.
December 2007
RMGC announces cut backs of two thirds of its 325 strong-staff. The company goes quiet for two years. This is because the project is favoured by the PD-L, but opposed by the PSD and UDMR and has a mixed interest from the PNL. While the PNL and PSD are key players in Government during this period, there are few chances the mine will be approved. By February, the company suspends the purchasing of land in the Rosia Montana area. It owns 78 per cent of the properties in the industrial area and surroundings.
November 2009
Former CEO Alan Hill publicly pulls out of the project, along with Britt Banks and Randy Engel of Newmont Mining Corporation. Mining boss Keith Hulley becomes Gabriel Resources interim CEO.
December 2009
BSG Capital Markets PCC Limited, part of diamond giants the Beny Steinmetz Group (BSG), buys 30 million units of shares and warrants in Gabriel Resources in a deal worth 67.5 million USD. The shares jump in value on the news and stay high, with a minor dip in February 2010. In the deal, BSG has the right to increase or decrease its interest in Gabriel Resources. This gives BSG around nine per cent of the company, with an option to almost double its stake. Electrum Strategic Holdings and broker Paulson & Co own about 18 per cent each and gold producer Newmont Mining Corporation retains 15 per cent.
URL: http://www.thediplomat.ro/articol.php?id=912
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