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) lawsuit against Romania for $4.4 billion in alleged losses related to the company’s stalled Rosia Montana gold and silver project, suffered a setback this week as the country told international arbitrators they can’t hear the Canadian miner’s claim.
Romania’s government said a recent, ground-breaking court decision had slammed the door on certain investment arbitration cases involving European Union members, so Gabriel’s case can’t be solved that way any longer, legal news site Law360.com reported, without elaborating further on the verdict.
Earlier this month, Gabriel Resources said it expected the hearing on the merits of its suit, filed last year at a World Bank’s tribunal, to take place in December 2019. The new development, however, may mean the company will have to wait longer than anticipated to find out whether Romania will pay the demanded figure or anything at all.
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.
The company’s President and CEO, Jonathan Henry, told MINING.com that while he was unable to comment on “media speculation,” he could confirm Gabriels’s case remained “very much alive and active.” He added that Romania’s challenge was only against one of the bi-lateral treaties the company is using.
After spending about 15 years and $700 million trying to build its flagship $2bn Rosia Montana mine, 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 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).
2 Comments
Rupert Wolfe Murray
Although the miners have shown great determination to do this project, research in Romania suggests that the vast quantities of cyanide they plan to use might leak into the water table of Transylvania, where millions of people live, and even pollute the River Danube.
Also, it’s hard to see how they are claiming $4.4 billion from the Romanian government when all they’ve done is close down the existing gold mines, bought a few cottages and put up lots of posters explaining how they are going to protect the environment.
Romanians say that this mining company has paid massive bribes to politicians, judges and local officials but it’s hard to believe that this would have amounted to billions of dollars.
Pro Bono
If such bribes were paid I wouldn’t hold out a lot of hope for a claim that was based on an application for a refund!