Romania looks to up stakes in gold mine despite protests
The government of Romania unveiled a draft of a law that would raise its stakes to six percent in Gabriel Resources’ Rosia Montana gold mine, sparking more protests about the project.
Protestors have rallied against the use of cyanide at the project, citing fears of another incident like 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.
Romanian 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, Bloomberg reported.
“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.
In August, Gabriel Resources said if parliament adopted the bill 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 in interview with Bloomberg.
“Hopefully it could be a two- to three-month process,” Henry said. “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.
With proven reserves, estimated by Gabriel, of 10.1 million oz of gold and 47.6 million oz 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 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.