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News 30 Jun 17

Canadians Sue Romania Over Halted Montana Gold Mine

The Canadian company Gabriel Resources is seeking 4.4 billion US dollars from Romania over the Rosia Montana gold mining project, which the government blocked in 2014. 

Ana Maria Touma
 The old gold mine in Rosia Montana. Photo: Francois Planche/Flikr

Canadian company Gabriel Resources filed a second lawsuit against Romania on Friday seeking $4.4 billion in alleged losses over its stalled Rosia Montana gold and silver project, which the government refused to approve following protests by environmentalists.

Two smaller companies belonging to Gabriel Resources group filed a similar lawsuit in July 2015 at the same court.

They accused Romania of not returning VAT taxes worth 27 million lei [approximately 6.8 million US dollars].  

The lawsuit, claiming Romania violated several investment contract clauses, was filed at the World Bank's court of arbitration, the International Centre for Settlement of Investment Disputes, in Washington.

“The Company has developed and committed to a comprehensive plan of investment for the sustainable development of the Rosia Montana region and all stakeholders, including protection for cultural heritage and cleaning up the widespread environmental damage caused by historic state mining activities. Gabriel’s plan for Rosia Montana has always had the support of the majority of local residents,” Jonathan Henry, Gabriel’s President and Chief Executive Officer, said in a press release.

After spending almost two decades and investing about 700 million US dollars in building the gold mine in Rosia Montana, the company, listed in Toronto, saw its project of opening the biggest gold mine in Europe blocked by the Romanian government in 2014 as it gave in to pressure from environmentalists concerned about the use of poisonous cyanide in the gold extraction process.

The government revoked a bill that would have allowed the project to continue, obliging the company to fire 70 per cent of its local employees.

Anti-corruption prosecutors investigated Rosia Montana Gold Corporation, owned by Gabriel Resources, for alleged money laundering and tax evasion in 2013. The investigation is still underway.

Romanian environmentalists have protested for years against plans to open the mine, especially because it was close to archeological sites dating from the Roman period and also to two protected natural parks.

What locals think about the mining project is unclear. A local referendum in 2012 over the project was invalidated because of a low turnout.

In 2016, the then Culture Minister, Corina Suteu, said the ministry had put together documentation to include Rosia Montana’s ancient gold mine, dating from the 1st Century A.D., on the UNESCO Heritage list.

However, Justice Minister Raluca Pruna opposed the initiative, warning that it might damage Romania’s chances of winning the arbitration case filed in 2015 in Washington.

The trial is set to last a few years. Romania is expected to reply with a memo to the accusations by early 2018. A first hearing in the case would take place in September 2019.

The Rosia Montana project has been deemed one of the biggest unexploited gold resources in Europe. The project was estimated to earn Romania about 24 billion US dollars.

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