World bank pulls out of controversial Romanian gold mine

The World Bank announced on Thursday that it is cancelling participation in the Rosia Montana opencast gold mine project in Romania. If completed, the project would be Europe’s largest opencast gold mine, would displace around 2000 people and would turn a neighbouring valley into a 600 hectare unlined cyanide storage pond. (see http://www.corporatewatch.org.uk/news/ romania.htm for CW’s initial report on the project).

The project had come under fire from an international coalition of NGOs based on flaws in the project proposal and concerns about Gabriel Resources, the project sponsor. In an official statement, the International Finance Corporation (IFC - the arm of the World Bank responsible for this type of project funding) said that it had ‘concluded that it is in everybody’s best interest that we do not pursue discussions with the company regarding IFC’s involvement in the [Rosia Montana] project.’

Corporate Watch has heard from people involved in the campaign that the project was apparently stopped by personal intervention from World Bank boss James Wolfensohn, who was said to be upset by a report of the project’s likely social and environmental impact, and by learning that Gabriel Resources CEO has convictions for drugs offences.

In March this year, the mining company started an aggressive relocation program, in the absence of adequate public hearings or any Environmental Impact Assessment (EIA) studies. Toronto-based Planning Alliance is responsible for the resettlement. Prior to working with Gabriel Resources, it had been involved with the controversial relocation of 20,000 people at the Gold Fields mine in Tarkwa, Ghana. The NGO coalition that opposes the project welcomed the IFC’s statement. Eugen David, president of Alburnus Maior, the local community group, said, ‘For well over two years we have been confronted on a daily basis with a psychological war to make way for the project. Today marks an important victory in our struggle to keep our land for our children. We are overjoyed and congratulate the IFC for its decision. We hope that other financial insitutions and banks will follow suit and pull out or refrain from investing in this speculative, unprofitable and unsustainable project that will only increase pollution, poverty and
corruption.’ Other members of the international coalition include CEE Bankwatch Network, Mineral Policy Center (Washington, DC), Friends of the Earth International (Amsterdam) and Greenpeace CEE (Vienna).

Robin Hickson, Gabriel Resources’ president, said the company fully intends to proceed without IFC support, using private debt and equity financing. The company approached the IFC, he said, primarily in the interest of gaining environmental and social assistance. However, the IFC had been expected to lend up to $100m to the $400m project, and it can be hoped that other lenders will follow suit and withdraw, suggesting Gabriel is now in more trouble than it is admitting to.

NGOs have expressed the hope that this decision represents a shift in World Bank policy to stop supporting projects which local communities oppose.