Romania 'set to reject' big Rosia Montana gold project

Bucharest march against gold mine project, 8 Sep 13 In the capital Bucharest thousands marched against the project on Sunday

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Romanian Prime Minister Victor Ponta says he believes parliament will reject a long-delayed gold mine project.

Mr Ponta was speaking after thousands of Romanians demonstrated against the Rosia Montana project.

The Canadian firm involved in the project, Gabriel Resources Ltd, said it could sue for breach of investment treaties if the draft law was rejected.

The mining would spoil mountain peaks and involve heavy use of toxic cyanide, environmentalists say.

The project to expand and modernise a mine in Transylvania, northern Romania, has been held up for more than a decade by a row over its environmental impact.

In late August the government approved the new draft law that would enable the project to go ahead, and the Canadian firm welcomed the move.

But on Monday, after big demonstrations across Romania last week, Mr Ponta said it was clear that the bill would be rejected in both the Senate and Chamber of Deputies.

"That will be the end of this bill. I, as prime minister, have to find other solutions for foreign investments and the creation of jobs," he said.

"As long as it is obvious that there is a majority opposed to the bill, it is useless to waste too much time on it."

Romania map

The existing plan would let Gabriel Resources run the mine as the majority stakeholder, but the Romanian state's stake would rise to 25%.

The state would levy a 6% royalty on the gold extracted, and the company's mine operator - Rosia Montana Gold Corporation (RMGC) - would create some 3,000 jobs.

The company aims to extract some 300 tonnes of gold and 1,600 tonnes of silver.

But for years environmentalists and other activists have argued that the mine would wreak havoc in a picturesque area and risk contaminating ground water with cyanide.

Gabriel warned that if parliament rejected the legislation, it would assess "all possible actions open to it", including suing Romania for "multiple breaches of international investment treaties''.

Last month Gabriel Resources said it would "undertake to preserve cultural heritage, ensure environmental protection and eliminate historical pollution".

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