Romania eyes gold mine plan

Canadian project raises concerns



By BERTRAND MAROTTE

Monday, September 20, 2004 - Page B7





MONTREAL -- With its candidacy for membership in the European Union

on the line, Romania must be very careful to ensure there will be no

environmental fallout from a giant gold mine a Canadian company

wants to build in the cash-strapped country, Romanian President Ion

Iliescu says.

"From one point of view, I'm very interested in the presence of a

Canadian company and for the region where they're trying to develop

this mining activity," Mr. Iliescu said in an interview with The

Globe and Mail on the weekend.

"It is very important from the economic and social point of view,

but the question was raised concerning the environment," he said,

pointing out that meeting strict environmental standards is one of

the conditions for membership in the European Union.

Romania and its fellow Balkan countries have much work to do

catching up economically to their European cousins, but the country

cannot afford to risk breakneck progress at the expense of

environmental and social concerns, said Mr. Iliescu, who met briefly

with Prime Minister Paul Martin and Quebec Premier Jean Charest on

Friday as part of a whirlwind visit to Canada.

Romania hopes to conclude EU membership talks by the end of the

year, with an eye to joining the bloc in 2007."One of the requirements is the protection of the environment," he

said.

Toronto-based Gabriel Resources Ltd. has run into opposition from environmentalists, next-door neighbour Hungary, local rights groups

and even archeologists over plans to build a massive gold and silver

mine in the impoverished Transylvanian region of Rosia Montana.

The project would require the resettlement of about 2,000 people,

the digging of huge pits that would result in the destruction of two

valleys and two mountain peaks, as well as the use of a

controversial extraction process using cyanide.

The region has been a mining district for more than 2,000 years,

going back to Roman days, but protesters say Gabriel's project is

too destructive.

Gabriel owns 80 per cent of the project, which would create the

largest gold mining operation in Europe. The Romanian government

controls 19.3 per cent and three Romanian companies hold the

remaining 0.7 per cent.

Gabriel has stated that the site contains proven and probable

reserves of 10.6 million ounces of gold and 52.3 million ounces of

silver. The company had planned on starting production next year but

has postponed that date in the face of difficulties relocating

villagers and securing the necessary permits and environmental

consent.

Also clouding the gold project's future is this November's election

in Romania. Mr. Iliescu, 74, must step down after two terms as

President but Romanian legislators earlier this month amended the

election law to allow him to run for the Senate.

Mr. Iliescu also said his country is in talks with Hydro-Québec

about several energy projects, including small- and medium-sized

hydroelectric plants.

Romania, as well, is interested in talking to Canadian banks about

how to reform the country's antiquated and underdeveloped financial

system, he added.

"After a long period of difficulties we're working to establish a

normal course of development," he said.