FINANCE: Locals Claim Win As World Bank Rejects Romanian Gold Mine

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Oct 11 2002 (IPS) - The World Bank has backed away from funding a controversial mining project in Romania after environmentalists and economists insisted the operation could become an ecological nightmare for the European country.

The contentious Rosia Montana gold mine project in Romania’s Apuseni Mountains would have required 100 million dollars from the Washington-based Bank’s private arm, the International Finance Corporation (IFC).

An international coalition of non-governmental organisations (NGOs) opposed the project because of flaws in the proposal, its potential environmental impact, and concerns about the record of Canadian sponsor, Gabriel Resources.

In a statement released Thursday, the IFC said it had "concluded that it is in everybody’s best interest that we do not pursue discussions with the company regarding IFC’s involvement in the (Rosia Montana) project”.

Commercial funding had become available for the project, it added, and further IFC involvement might slow it down.

The decision came just weeks after dozens of civil society groups protested Bank financing of fossil fuel and mining projects.

At the annual meetings of the Bank and the International Monetary Fund (IMF) in Washington last month, the groups appealed for the Bank and other international financial institutions to immediately phase out all financing of fossil fuel and mining projects.

Had it gone ahead, Rosia Montana would have been Europe’s largest opencast or open-pit gold mining operation.

To make the scheme economically feasible, Gabriel Resources planned to re-make the valley of Rosia Montana – the oldest documented settlement in Romania – into four open-pit mines.

The neighbouring valley of Corna would have been converted into an unlined cyanide storage ‘pond’, covering up to 600 hectares and contained by a 180-metre-high dam.

Cyanide has been widely used in mining worldwide but is now being opposed by a growing number of groups for its harmful effects on the environment. The U.S. state of Montana has banned its use in new mines.

The pits would have generated millions of tons of cyanide-laced waste.

In a statement released Friday, the international coalition described a catastrophe at the Baia Mare gold mine in Romania, where a cyanide spill in 2000 polluted the Tisza and Danube Rivers, contaminating the drinking water supply of 2.5 million people and reportedly killing 1,200 tons of fish.

Opponents of the project were elated at their victory.

"For well over two years we have been confronted on a daily basis with a psychological war to make way for the project,” said Eugen David, president of local community group Alburnus Maior.

Two of the group’s activists met with World Bank President James Wolfensohn late last month.

”Today marks an important victory in our struggle to keep our land for our children,” David said in a statement released Friday.

Other members of the international coalition include U.S.-based Mineral Policy Centre, Amsterdam-based Friends of the Earth International and Greenpeace in Vienna.

"This sends a powerful signal to all lenders: reject projects that communities have opposed. The World Bank and private banks should apply this precedent to all future lending decisions," said Payal Sampat of Mineral Policy Centre after the decision.

MiningWatch Canada, another coalition member, described the decision as ”responsible”.

"We are pleased that the IFC has recognised the enormous social, environmental and lost opportunity costs of the Rosia Montana gold mine, and made the responsible decision to turn it down," said Joan Kuyek of MiningWatch.

The project was also heavily criticised by a group of 83 economics professors from Romania’s renowned ASE University, along with a host of international archaeologists.

The archaeologists were worried that the project could destroy the area’s unique Roman mine galleries and other treasures.

More than 2,000 people would have been relocated for the mine, including many subsistence farmers who did not wish to leave their lands.

The IFC had projected that the mine would employ a workforce of 250 to 300 people over the mine’s estimated lifespan of 15 years.

Toronto-based Gabriel Resources had approached the IFC for a loan of 250 million dollars but the institution was expected to contribute only 100 million dollars.

Opponents complained that the company had no previous mining experience.

Last month, Oxfam America said that the Bank and other international financial institutions (IFIs) should reassess their continued backing for mining projects in poor countries.

Since 1980, the Bank and its affiliates have provided well over one billion dollars in loans and other support for rock mining projects. But lending has risen sharply since 1994, with the Bank group providing as much in new loans during that period as it did in the 14 preceding years.

FINANCE: Locals Claim Win As World Bank Rejects Romanian Gold Mine

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Oct 11 2002 (IPS) - The World Bank has backed away from funding a controversial mining project in Romania after environmentalists and economists insisted the operation could become an ecological nightmare for the European country.
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