Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
Canadian miner Gabriel Resources (TSX:GBU) continues to generate polemic around its proposed gold and silver mine in Romania, as the company said Wednesday it is ready to sue the country for as much as $4 billion of damages if it cancels the permit for Rosia Montana.
“We have a very, very robust case, and we believe we have claims up to $4 billion that we can send to the Romanian state,” Gabriel Resources Chief Executive Officer, Jonathan Henry, told Bloomberg in a telephone interview. “We will go ahead and do that if the vote is against.”
The debated mine has cost the junior miner more than $580 million and no fewer than seven different CEOs, since the Canadian firm first obtained the concession in 1999.
Ongoing opposition and legislators’ reviews have also have an impact in Gabriel Resources. Its market value on the Toronto bourse is now a mere $300 million, way lower than a peak of over $3 billion at the end of 2010 and the $2.5 billion reached in early 2012.
The company sank almost 54% on Monday, hitting its lowest level in more than a year, after Prime Minister Victor Ponta said that parliament should “quickly” vote on whether to abandon the Rosia Montana project because of the massive opposition it faces.
Thousands of Romanians have been rallying on the streets calling on the government to reject the project, one of the largest undeveloped gold deposits in Europe, as it will use cyanide to extract precious metals.
Rosia Montana is a community of sixteen villages located in a district known as the Golden Quadrilateral, in the South Apuseni Mountains of Romania, which has has been one of Europe’s most prolific mining districts for over 2,000 years.
The Rosia Montana concession, which extends over four of these villages, was subject to open pit mining by the state mining company, Minvest, until 2006. Following the closure of the mine with the loss of thousands of jobs, unemployment is reported to be 80% in the region.
Gabriel Resources, the parent company of Rosia Montana Gold Corp. in a partnership with the Romanian government, owns an 81% share in the proposed open-pit mining project, while state-run CNCAF Minvest holds the 19% remaining stake.
Image: Screengrab from Romanian TV News
17 Comments
CanGEO
I work at a gold mine with a mill on site that uses cyanide to extract gold from sulphides. We have not had a single environmental problem since the milling began. As long as the government and company are doing things properly and readily monitoring their tailings pond and dam everything should be fine. Certainly would be a lot better for Romania and it’s people to have industry in the area that will provide jobs for the people and provide royalties to the government, than to have the government get sued at all. The legal fees alone would cost more than a pretty penny, not to mention if they lose the lawsuit and are ordered to pay!
larisa
This is not the point of our protests, not the main point. Fact is we suspect government members of having been heavily bribed and knowing their ways so far, we do not trust they will do things properly. We do fear another case of http://www.youtube.com/watch?v=1oDoO5QpLv0, so far everything is copy-paste; moreover, mainstream media (of course, main broadcasters of RMGC advertising spots, thus main beneficiaries of considerable amounts of money during crisis period) only broadcast biased shows or interviews, ignoring everything that has been going on in the streets. There have only been a few exceptions, mainly from 1 TV station who does not have such a contract with RMGC. Otherwise, all the stories are one-sided.
The history is even sadder, since we found out how this cooperation between Romania and RMGC started in 1995 – it is not a clean history, not by far, and under normal circumstances quite a few people should go straight to jail.
We doubt all this data grants an easy and safe gain for Gabriel Resources, rotten beginnings call for worse continuances.
In short – we are now fighting for our country, and it’s not the ecological standpoint that we take, it’s the economical one, against all those who wanted to profit themselves, not considering the country. It’s not just to let it slide.
Ciprian
This is just a joke! The company is just trying to give a false hope to the share holders to keep the price up as long as posible for the big share holders to go out without big losses. If the company will remain without money to buy local politicians everything stops. How they will finance their dirthy campain after that?
Titan
I work in the mining industry abroad and I am Romanian. There is no Romanian company who has the logistics to mine this deposit.
Ciprian
Maybe you will find interestig the story of a German journalist in vacation during this protests 🙂 Enjoi
http://casajurnalistului.ro/golden-mountains-and-narrow-stairs/
MINING.com Editors
Excellent story. Thanks for sharing,
Cecilia
Matt
Sorry Ciprian, but that was no “German journalist on vacation” The company uses PR as does the “protest” side.
And his statement that all the country gets is 6% is pure fabrication. The Govt owns 20% of the mine which guarantees 20% of the profit in addition to the 6% Royalty and all the taxes paid through employment, goods and services.
I see nothing wrong with Romanians deciding their own development, however I would like to have heard from the people in the Rosia Montana area as usually protesters are from the urban areas and universities where they are secure in their own lives and do not depend on mining for a living.
Ciprian
http://www.youtube.com/watch?v=y89oSum59BY
Elena Halmaciu
GABRIEL Resources would be better keeping its own business in Canada. Being an LTD company, after the gold extraction, we will hear they went bankrupt and they won’t have any other responsibility to Romanian people because the LIMITED is limited, so they won’t “pay” legally nothing to the Romanian government. And better don’t threat Romania.
Friendly view
This is a big loss for Romania. I appreciate it is mainly a political game; however in a long term (10 or 20 years?) this mine will go ahead and it is not good that this could not be resolved now.
Technically there is nothing wring with the technology, it is a common technology used all around the world and in developed countries such as Australia, Canada, USA etc. The issue with Romania is lack of knowledge and practical experience and therefore it makes it so easy to create a fear and raise the opposition to the Project.
As for the environment, whoever was in Rosia could see that the damage from old mining works is already significant, acidic streams are leaching from old Roman works and water streams are brown and heavily polluted. Lots of money is required to eliminate it . Only a major new project would be able to fix it (Otherwise why are the protesters or government not fixing it now?).
Again I do not want to make assumptions about political issues, corruption and similar…..I have no first hand knowledge of it.
However, technically there is absolutely nothing wrong with CIL or CIP technology and no cyanide would be discharged from the plant if only operators are properly trained (as it is the case in hundreds of similar facilities around the world).
Itw as sad to see the surrounding townships around the region… it looks as nothing’s been invested in this part of the country for at least 40 years(!) and that joining EU has not brought any benefit to these people.Mopst of te industrial buildings are in decomposing state and there i sno new construction and development. How are they going to survive? Not all of them can move to big cities or Western Europe?
MR NEW LIFE
GO AWAY GABRIEL RESOUCES YOU MIGHT LOSE EVEN MORE MONEY NOT JUST ENRONS !
MR NEW LIFE
THE LAW IS THE LAW !
IF YOU BREAK THE LAW EXPECT TO BE NAMED AND SHAMED LOVE FROM
S C NEW LIFE UK LIMITED . NEW LIFE CHARITY AID TO ROMANIA .
WHAT GO AROUND COMES AROUND !
GABRIEL RESOUCES IS A SCAM I WILL GIVE ALL THE INFO I KNOW TO ROMANIAN GOVERNMENT AND GABRIEL RESOUCES WILL JUST BE ANOTHER ENRON SAGA
MR NEW LIFE
THIS IS GOING TO GO TO THE END !!!!
MR NEW LIFE
GO AWAY GABRIEL RESOURCES YOU WILL BE NAMED AND SHAMED AS THE EARTHS MOST DANGERIOUS MINING COMPANY OR FIRM THAT IS NEXT TO LAX LOUTHER IN THE SUPER MAN MOVIES !
” YOU WILL NEVER BE WELCOME IN ROMANIA “
Tim Harry
Gabriel was costed seven CEOs – this is hilarious. Maybe mining companies should be more careful with their corporate expenses, such that this industry would not be where it is today.
Alvin
They will not sue anybody because they do not have a case let alone a ‘robust case’ . It is just another corporate big fat lie .
Everybody can read about their dodgy agreements with the government and other institutions and they needeed a special law to exempt them from environment and many other regulations and laws because they could not fulfill the legal requirements . There are many final decisions ruled by courts against them so it is clear how well they can comply with all the legal requirements.
If you will (and want to ) properly analyse this company (and projects) You will surely see that it is just a bubble that will explode soon in the ( remaining) investor’s pockets … I can only hope that you aro not one of them 🙂
George
GOD … This site is also paid by the firm.Why can’t there be an honest man in this day-an-age …
KEEP YOUR FACTS STRAIGHT AND MODIFY (CORECT) THE ARTICLE
1:The Company CAN’T SUE NOBODY,there is no contract signed (will is
done when the project starts) for the company WITH NO PREVIOUS
EXPERIENCE,to
accuse the violation of the contract,we are not at fault for how they
VLLINGLY spend their money,only to try to create leverage point of
forcing the deal to happened and there is a signed contract between
Romanian and Canadian gouvernment stating that no country is eligible
for
refuseing or canceling of a project (of a firm based in the other
country) for protecting public interest wich include NATURE,PEOPLE’S
HEALTH ETC.
2:The Company leaders said,(after finding out from Canadian
press,wich took over the news from Romanian press) that they didn’t
even raise THE POSIBILITY of sueing,let alone warned or threatened to do
so