Rosia Montana: The European Union and the continent’s largest open pit gold mine project

This article was co-authored by Alexandru Firus

We don’t really expect the natural resource of gold to be a problem  for good governance in Europe. But it might be one in the light of the latest developments in an ambitious gold mining  project in one of the newer member states of the European  Union: Romania. In the small town of Rosia Montana, the  precious metal in the ground beneath the streets represents  both an economic opportunity and a threat to the area’s  ecological and archeological heritage, as well as to  existence of many of the houses themselves.

The upshot is a protracted struggle between environmental activists and international investors for the  future of Rosia Montana. Will the outcome be one based on  sustainable and democratic governance? Are the politics of  Romania and Brussels – the one noted for its corruption, the  other for the influence of corporate lobbyists – really  immune to the sirens of a multi-billion dollar industry?

Gold in them thar hills…

If we would could see gold shining from space, as we can see the bright lights of New York at night, a huge swarm of “fireflies” would be visible, right in our European backyard – in the Carpathian Mountains in Romania’s Transylvania.

For thousands of years, Carpathian gold has been a “headline” in the interests of different actors. The Romans, the Austrians and the Soviets altogether took more than 1,500 tons of gold from the historic mining district in west-central Romania, better known as “the Golden Quadrilateral”.

Even so, the situation of the mountain dwellers in Romania has never changed and they still remain some of the poorest people in Europe, with monthly incomes below the national average of 450 dollars.

According to estimates by the National Geological Institute there are at least eight potential mining sites in Romania, with no less than 1,100 tons of raw ore available. In other words, the Western Carpathians are worth at least 54 billion dollars.

One of these mining sites is the gold beneath Rosia Montana –  a bone of contention for many years now within the local community of 3,000 inhabitants. Usually, this kind of mining business goes unnoticed by the general public as it does with other gold mines in Romania. Only Rosia Montana, where the average citizen is directly affected by the mining, offers the perfect setting for conflict.

The gold at Rosia Montana is located exactly beneath the small town and the four surrounding mountains that supply the everyday needs of the peasants living there. 25% of the population has already left the area, lured away by the exaggerated property prices paid by the Rosia Montana Gold Corporation (RMGC). Furthermore, the site was a UNESCO world heritage site till the end of the 1970s when the Communist government desecrated it again for its gold. It has kilometers of ancient Roman mining tunnels, hundreds of species of protected birds and animals, as well as abundant forests and truly fresh air.

All of this will cease to exist if present mining operations go ahead. The main question is whether it will be worth the sacrifice. The main actors are the Romanian state, the Rosia Montana Gold Corporation and its shareholders, the “Alburnus Maior” association of the local community and, on the sidelines, the European Union and its laws.

The state shut down the last operating gold mine in 2006, citing the  lack of subsidies as its reason for doing so. From the very beginning in the late 1990s, the state’s approach has been to concede exploitation rights to foreign investors. In 1999 permission was given, in 2002 the Urban Plan was changed accordingly but the exploitation of the gold never actually  started.

On the central level, the government approved most of the proposals and studies of the investors, yet many of these were voided by national and regional courts. The Romania government also opposes the region being made into a UNESCO heritage site with the president coming out and publicly endorsing the mining project. Last month an archaeological discharge certificate was issued by the government in Bucharest. According to Article 135 of the Romanian Constitution, exploitation is illegal as underground resources are exclusively public property.

From the beginning of the project, the RMGC presented itself as the savior of the area promising the creation of jobs for miners and mining support industries. The figure officially presented to the media is one of 2,300 jobs. However, since the Romanian courts have forbidden disclosure of the contract between RMGC and the Romanian state, these figures cannot be regarded as official. RMGC is actually a mammoth corporation with three official stakeholders. The actual persons involved are hard to trace given the  numerous name changes of companies, and affiliate companies, capital swaps or enterprises that exist only on paper.

The third main actor, one of the lineup of 47 organizations which oppose the project, is Alburnus Maior – the old Latin name for Rosia Montana – a local NGO that organizes the “Save Rosia Montana” campaign. The main arguments of the “Save Rosia Montana” campaign are based on the findings of the scientific impact studies on the project. The results of these studies send a clear message: in social, economic and cultural terms the project brings no sustainable advantages whatsoever. Other important international organizations are also active, notably Greenpeace, but Alburnus Maior is the major voice to be heard on the issue.

The 2000 Baia Mare cyanide spill and the EU’s growing role

In 2003 an EU parliamentary delegation first visited the site of Rosia Montana, 4 years before Romania became an official member of the EU. When meeting with the company and the community, the EU had an early intimation of the conflict the Romanian government would have to deal with: deciding between job creation and environmental protection.

The delegation’s summary note clearly answered the question of whose authority it was, stating that it is a “matter for Romanian national, regional and local authorities” even though the delegation was aware that Romania was struggling with a very high rate of corruption, and how susceptible this made the country to the lure of a multi-billion dollar mining project.

Another reason for the EU to send an observer group to the site is anxiety on the part of its neighbor country Hungary which was badly affected by a cyanide spill caused by an accident in Baia Mare in 2000, another gold mine project in northwest Romania. This was the largest environmental disaster ever to affect the Tisza, the second largest river in Hungary which flows into the Danube, Europe’s biggest waterway: 1,400 tons of fish died, soil was poisoned and the basis for the livelihoods of fishermen and farmers taken away. It was considered the worst ecological disaster in Europe since Chernobyl.

Even the United Nations Environment Programme (UNEP) sent a group of international experts to make an analysis of the environmental damage. Yet the EU seems to have failed in taking a stance as a strong actor in EU environmental governance as Greenpeace has evaluated the EU task force report as being  poor in terms of concrete measures.

The call for a fair public debate on the Rosia Montana project by Romanian Social Democratic MEP Daciana Sarbu after a one-sided lobby event by RMGC in the European Parliament in 2010 was answered recently with the launch of the Rosia Montana Support group consisting of 100 representatives from industry, NGOs, trade unions and employers’ organizations.

Is EU environmental legislation strong enough to prevent future environmental disasters?

The biggest environmental danger represented by the mining industry is its use of cyanide which can destroy complex ecosystems once it enters in the water cycle. In 2006 the so-called “mining waste directive” was adopted that proposed measures to limit the use of cyanide in extractive industries. The directive includes a gradual reduction scheme for the concentration of cyanide which aims at a five fold reduction in pollution levels by 2018.

Following the example of national legislation in Hungary, the Czech Republic and Germany, in May 2010 the European Parliament adopted a resolution on the “Ban on the use of cyanide mining technologies”. The resolution weighed the risks of severe cross-border damage against the creation of jobs for a limited period of between 8 and 16 years. Commissioner for the Environment Janez Potočnik rejected the initiative, pointing to the economic harm it would do the EU mining industry. This position raised criticism among Green MEPs like Franziska Keller.

In April 2011 however, Potočnik picked up Keller’s recycling approach. He gave a striking example of the recycling of resources in explaining the EU 2020 strategy for smart, sustainable and inclusive growth, saying: “For example, did you know that 40 mobile phones contain about one gram of gold. You would have to move and treat on average one ton of ore, often using toxic substances such as cyanide, to get the same amount from primary extraction.” So has he changed his mind in favor of an EU-wide cyanide ban?

In the case of Rosia Montana it seems that despite the formal power of legislation the local community might still have the final say in safeguarding the region and the EU from a dangerous gold rush with unpredictable environmental consequences. Eugen David, President of the Alburnus Maior NGO and a former mining engineer who turned to farming couple of years ago might be right when he says, “As long as one person stays at the site, the project cannot take off”. But the question about what will happen to the other ‘attractive’ gold mountains which aren’t directly located under streets and houses still remains to be answered.