Government publishes Rosia Montana mining draft bill

The Department of Large Infrastructure Projects and Foreign Investments published on Tuesday the draft bill that approves the start of mining activities in Rosia Montana, one week after being passed by the government.

The draft bill, which has be debated by MPs, says the project pays royalties of 6 percent and the government has the option to collect it in gold. RMGC, the miner, will set up an environmental guarantee fund of USD 25 million to cover the risks, which will be updated periodically.

“We have negotiated, fundamentally changed the negotiation data, the environmental protection, the cultural and economic interest,” commented PM Ponta on the draft law. He added that Romania’s shares of revenues from the project will be used to finance regional projects, such as the construction of highways.

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Ponta recently said he will vote against the project in Parliament. He added it’s his job as PM to “open” the country to international investors.

RMGC set to start mining in 2016

President Basescu described as “cowardice” the government’s decisions to send the draft bill in Parliament. He suggested a nation-wide referendum on Rosia Montana could be held in 2014, when elections for the European Parliament are scheduled. The president said he supports mining, but cautioned that all stakeholders need to be involved in a dialogue before making a decision.

The PM said a special commission has been set up in Parliament to collect opinions, underlining the final decision will be taken with “required transparency and responsibility”. He didn’t mention a time frame for the debates in Parliament.

RMGC, the miner, will dig for gold and silver in Rosia Montana for 16 years, and will spend another 9 years to rehabilitate the area. The miner is controlled by Canada-based Gabriel Resources and Minvest Rosia Montana, the state-owned mining company, has 19.3 percent of the shares. The government aims to increase Romania’s stake in the project to 25 percent.

According to the bill, around USD 2.3 billion will go into state coffers during the mining period, taking into account a long term gold price of USD 1,200 per ounce. The government is set to collect USD 591 million in royalties, and be paid USD 580 million in dividends.

Another USD 445 million will be the tax profit, while interest and dividend taxes for non-residents will generate another USD 368 million. The social security contributions for RMGC’s employees will add USD 200 million to the national budget and fuel excises and other taxes will generate another USD 171 million for the country.

In case RMGC finds other minerals in Rosia Montana, it will need to obtain new permits to mine them. The timeline envisaged by the government outlines the miner will be able to set up its equipment and build the exploitation assets starting June 2014 and start mining operations in November 2016.

People angry at mining project

The Rosia Montana project has raised serious concerns among environmentalists as cyanide will be used to extract the gold. The government says in the draft bill that RMGC has set a lower cyanide threshold compared to the EU standards, a maximum of 7 parts per million during offload in the tailings pond.

Thousands of people have rallied across Romania since Sunday, expressing their anger at the government’s approval of the gold project. People are concerned by its risk of damaging the environment. Some are questioning the transparency of the Rosia Montana deal, while others claim that Romania didn’t get a fair share in the project. People also took to the streets in cities across Europe and the US.

Peaceful protests have been staged in the last three nights in the Universitatii Square in Bucharest. Protesters have used social media to organize, accusing the mainstream media of ignoring their movement.

Ovidiu Posirca