Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Gabriel Resources (TSX-V:GBU) will have to wait until late next year to find out whether Romania will have to pay it $4.4 billion in alleged losses related to the company’s Rosia Montana gold and silver project, which the government of that country refused to approve following relentless protests.
The miner said the suit, filed last year at a World Bank’s tribunal, was met with a counter claim from Bucharest in February and a second one in May, which objected the company’s rights to utilize the United Kingdom-Romania bi-lateral investment treaty as a basis for its claims before the bank’s International Centre for Settlement of Investment Disputes (ICSID).
Company is seeking $4.4bn in compensation for alleged losses related to its Rosia Montana gold and silver project, which Romania refused to approve following relentless protests.
In light of the new developments, Gabriel Resources now expects the hearing on the merits of its claim to take place three months later than originally anticipated, in December 2019, it said Wednesday.
After spending about 15 years and $700 million trying to build its flagship $2bn Rosia Montana mine in Romania, the Toronto-listed company locked-horns with the government of the European country, which yielded to environmentalists’ pressure and halted the project on concerns over the use of cyanide in the extraction process.
Opponents to the project also claimed that Rosia Montana Gold Corporation (RMGC), majority owned by Gabriel Resources, incurred in money laundering and tax evasion.
Bucharest officially withdrew its support for the project in 2014, after revoking a bill that would have allowed the mine to go ahead.
Gabriel tried reaching an “amicable solution” with the Central European nation, but the lack of answers pushed it to seek international arbitration.
The open pit operation would have been Europe’s largest gold mine and, according to the company, it would have injected up to $24 billion into Romania’s economy.
The $4.4-billion damage claim represents roughly 2% of the nation’s gross domestic product of about $220 billion (187.5 billion Euros) recorded last year, based on data from its National Institute of Statistics (INS).
