Canadian gold mine project in Romania could go to referendum

The Romanian government is considering holding a referendum on whether to allow a Canadian company to build a gold mine in the Transylvanian mountain region of Rosia Montana that it says would be Europe's biggest open-cast gold mine.

Thousands protest against controversial Rosia Montana project

Women in Bucharest protest the proposed Rosia Montana gold mine using a banner reading 'Cyanide Kills, Poverty Doesn't.' The protesters claim that damage from the extraction process at the mine would outweigh the benefits the mine could bring to the economically depressed region. (Radu Sigheti/Reuters)

The Romanian government is considering holding a referendum on whether to allow a Canadian company to build a gold mine in the Transylvanian mountain region of Rosia Montana that it says would be Europe's biggest open-cast gold mine.

President Traian Basescu said on Monday that he would not rule out holding a vote on the proposed mine that Whitehorse-based Gabriel Resources has been trying to get approved for about 14 years.

Basescu proposed holding the referendum at the same time as the European parliamentary elections in May of next year, even though parliament is expected to vote on the project this month, meaning it could face further delays after it is approved.

His statement, as reported by the Mediafax news agency, came after thousands of people protested against the proposed mine on Sunday in the streets of the capital, Bucharest, and elsewhere in the country. 

The open-pit gold and silver mine would be built on a 2,400-hectare site in the mining region of Rosia Montana, a group of villages located in the picturesque Western Carpathian Mountains (also known as the Apuseni) about 430 kilometres northwest of Bucharest.

The project, along with others in the area, has been put to a referendum once before, at the regional level in December 2012, but the results of that vote were invalidated because the turnout was below the required minimum of 50 per cent.

The majority of residents in the Rosia Montana district reportedly support the mine, but many Romanians still remember the devastating effects of the accidental release of tailings containing cyanide into their river system from the Baia Mare mine in 2000 and are concerned about the planned use of cyanide in the extraction process at Rosia Montana.

The Baia Mare spill, which started when a dam containing the toxic waste material from the mine burst and spread to the Danube River in neighbouring Serbia and Hungary, polluting several river ecosystems and killing thousands of fish. It was deemed one of Europe's worst human-caused environmental disasters by the United Nations Environment Program.

Many Romanians are reluctant to allow the same mining methods that made that spill so damaging to sully an area known for its natural beauty.

Draft law ups government stake in company

Protests against the Rosia Montana project have occurred sporadically over the years but gained strength again last week after the left-leaning government approved a draft law that would increase its stake in the project from 20 to 25 per cent and increase the royalty tax it would collect from four to six per cent.

A view of Corna, one of the 16 villages that make up the Rosia Montana district. The picturesque area is known for mining but also for the natural beauty of the surrounding Western Carpathian Mountains. (Radu Sigheti/Reuters)

Parliament is to vote on the bill later this month, and it is widely expected to pass. Gabriel Resources told the Bloomberg news agency on Monday that it expects the approval process to be complete by November.

Both Basescu and Prime Minister Victor Ponta have come out in favour of the project, though the latter drew the scorn of some political observers when he said that if he were speaking merely as a member of parliament he would be opposed to the project, but as prime minister it was his duty to support it because of the economic benefits it would mean for the country.

On Monday, Ponta said he would support a referendum on the project.

The government has branded the project of "special national interest," which observers say gives the company freer rein to expropriate property needed for the mine.

According to Gabriel Resources, which operates locally as the Rosia Montana Gold Corporation, the concession in question would affect four out of the 16 villages that make up the Rosia Montana district, which has been mined since Roman times and is known as the Golden Quadrilateral.

The company estimates that the area it wants to exploit has proven reserves amounting to 10.1 million ounces of gold and 47.6 million ounces of silver. 

The Bloomberg news agency has calculated that at current prices, the reserves would be worth about $15 billion US, or roughly 10 per cent of Romania’s annual economic output.

Gabriel promises jobs for depressed region

The company has said it has already spent $400 million US on the project, which Gabriel Resources says will generate more than $4 billion for the Romanian economy and create thousands of jobs in a region suffering from high unemployment.

Miners wait outside the ancient Roman gold mine Catalina Monulesti, which is one of several in the Rosia Montana region being restored to become part of a future mining museum. (Radu Sigheti/Reuters)

The company says analysts estimate the mine will create about 2,300 jobs in the construction phase and more than 3,600 direct and indirect jobs in the operation phase. It expects to get 16 years of life out of the mine and about 500,000 ounces of gold per year.

But environmentalists and other opponents of the project, which include respected non-governmental organizations such as the Soros Foundation of Romania, say the damage to the region and the possible ecological fallout are not worth it. They say the quarries Gabriel Resources wants to build would destroy four mountain tops and wipe out three out of 16 villages as well as the ruins of ancient Roman mine galleries.

The company estimates that once it receives an environmental permit for the project it will take a year to finalize all permits and secure financing for construction and another 30 months after that before the mine is up and running.

Sunday's protests in Romania are only the latest sign of opposition to Canadian mining projects abroad. Similar demonstrations have occurred in Kyrgyzstan, Colombia, Peru and elsewhere.

Shares of Gabriel Resources were down about 18 per cent Tuesday, closing at $1.39 on the Toronto Stock Exchange.

With files from Reuters