Tensions run high over Romanian gold

By Helen Morris

Date: 09/12/04

The Canadian-Romanian Rosia Montana Gold Corporation's plans to develop Europe's largest gold mine in Romania exploiting 300 tonnes of gold and 1,600 tonnes of silver reserves have come under attack amid environmental concerns.

nada has an 80% interest in the company while the Romanian government holds 19.3% along with the initial exploration licence for the site.

The economic and environmental considerations are finely balanced. The project would bring 540 mining jobs to the area for the next 17 years. Outside investment is critical for the mining sector in Romania, which has witnessed extensive pit closures and reduced employment. The 2004-10 government mining restructuring strategy encompasses further mine closures, cutting 48,000 of the sector's 68,000 jobs. It also plans the gradual elimination of subsidies. But if the Romanian authorities sanction the development, they risk alienating their Hungarian neighbours who would be downstream of any contamination.

Construction of the mine would necessitate the relocation of around 2,000 people from the area. The company withdrew an earlier proposal and works on a new plan that would comply with Romania's legal obligations under EU directives.

Violeta Dragu, counsellor for environment policy at the Romanian mission to the EU, states that only when the company submits the project presentation report will the Romanian authorities provide the company with specific terms of reference for the Environmental Impact Assessment in line with EU regulations.

The Rosia Montana site is near the controversial Baia Mare gold mine which was operated and half-owned by an Australian company, Esmerelda Exploration. In January 2000, 100,000 cubic metres of cyanide sediment and other heavy metals from the plant leaked into the Szamos, Tisza and the Danube rivers, devastating marine life and contaminating drinking water. The environmental protection committee of the Hungarian parliament is concerned that the possibility of a similar disaster at Rosia Montana cannot be excluded and is pushing the Hungarian government to reject the project to develop the mine.

But Adrian Dascalu, public relations manager at the Rosia Montana Gold Corporation, is adamant that "there are no similarities between the technology used at Baia Mare and the very latest technology which will be used at Rosia Montana".

"All cyanide used in extracting the gold will be passed through a cyanide destruction circuit reducing levels to below the maximum designated by the European Union for release," he adds.

Hungarian centre-right MEP Péter Olajos is spearheading opposition to the project. "We are pushing for the progress with the mining wastes directive - about to undergo a second reading by the environment committee - to be accelerated and the acceptable levels of cyanide to be reduced," he says.

"We must press the Romanians to apply all EU regulations when granting any licence for this project. We are very worried about this project going ahead but the company will be reluctant to abandon operations as they have invested so much money already. Transparent cross-border cooperation on environmental issues would be a real example of an improvement in the, at times, historically tense Romanian-Hungarian relationship."

The project has sharply divided local residents. At this stage, according to Dascalu, the Rosia Montana Gold Corporation has already acquired 42% of property and 95% of those remaining have requested their property be evaluated for possible purchase by the company.

The local non-governmental organization Alburnus Maior warns that the project will destroy what UNESCO describes as a site of special importance containing a unique archaeological complex of Roman mine galleries.

None of the parties appear to be in any mood to compromise. Olajos is nervous of pinning too much hope on Romanian Prime Minister Adrian Nastase's 23 September statement that the government would not issue any licence for the mine project. Nastase's comments came on the eve of parliamentary and presidential elections and at a key stage in EU accession negotiations.

The Romanian ministry for environment and water management stresses that, "the ministry's support for the project is not an issue for discussion and is limited to a strict legal framework harmonized by the EU".

Dascalu refuses to speculate about a possible compromise solution or scaling down of the project. "This is the best project for the environment and for investors," he says. "It is not a political issue, we must simply abide by Romanian and EU legislation, not please a particular government."

• Helen Morris is a freelance journalist based in Brussels.

Report of Canadian-Romanian Rosia Montana Gold Corporation's plans to develop Europe's largest gold mine in Romania exploiting 300 tonnes of gold and 1,600 tonnes of silver reserves. The undertaking has provoked heavy criticism because of its environmental implications.