Romania's ruling party says yes to Europe's would-be largest gold mine
Romania is one step closer to becoming the co-owner of Europe's largest open-pit gold mine. On Wednesday the ruling Social Democratic Party approved draft legislation allowing Canadian miner Gabriel Resources to proceed with its Rosia Montana proposal, which has been under debate for 14 years.
Declaring the project of "overriding national public interest," Prime Minister Victor Ponta pushed forward legislation on which parliament will officially vote in September.
The Rosia Montana site – originally created during the communist era – is run by the local Rosia Montana Gold Corporation (RMGC). Gabriel owns majority shares of RMGC and the Romanian government 20%. Under the draft law, the state will own 25% once construction begins.
The draft bill also requires Gabriel to pay royalty taxes of 6% – 2% more than other mineral resource projects.
Gabriel has been negotiating with the government over royalties, ownership rates, environmental and cultural concerns for more than a decade now. In a statement on Wednesday the company's CEO said he was "extremely encouraged" by recent developments.
Pending parliamentary approval, Gabriel anticipates first gold production in November 2016.
But not everyone is applauding the government's move. Some locals strongly oppose the Canadian miner's plans to use cyanide as part of the extraction process and cut into mountain peaks.
In response Gabriel has promised to "ensure environmental protection and eliminate historical pollution" while adding 2,300 jobs during construction phases and 900 for operations. Unemployment in the Rosia Montana area reached 80% after a state-owned miner, Minvest, ceased all operations in the Rosia Montana concession zone in 2006.
Gabriel also estimates the project will bring more than $24 billion to the country through direct and indirect GDP contributions.
Rosia Montana, located in western Transylvania, has estimated reserves of more than 10 million ounces of gold and 47 million ounces of silver.
Gabriel's stock price has proven highly sensitive to the company's political dealings which have often been confusing and controversial. On Wednesday the miner gained more than 5%, trading at $1.84 but by mid-afternoon simmered down to $1.76. Wednesday's peak was the firm's highest share price since May.
Images from Gabriel Resources