California Reborn: The Gold, the Village, and the Company

The gold of Rosia Montana already attracted the Romans. Today, Canadian based mining company Gabriel Resources wants to build Europe’s largest open gold mine in Rosia Montana, using the controversial cyanide leaching technology. The company promises to catalyse economic progress, yet ecologists warn of incalculable risks. Meanwhile, not all of the villagers believe in the company’s promise of fast prosperity.

The maze of narrow streets and overgrown paths in the village’s historic heart tells a story of past fortune. The gold and silver in the mountains surrounding the village enabled the construction of three massive churches and many respectable buildings. Already many centuries before this, the gold in the valley had attracted the Romans who came to what is now the oldest documented settlement in Romania. Before the war, Rosia Montana was a flourishing mining community of about 3000 inhabitants, which, unusual for a town of this size, even had its own casino. Today, the former casino, like many other historic buildings, is in bad repair. The population of the village has decreased by half, and the old bumpy streets are empty.  

Today, life concentrates on the shabby little village square with two grocery stores, a bakery and two pubs. Are they still there today? No one can predict what things will look like when you read these lines, as changes are coming fast to Rosia Montana. The time of rapid change began when a group of foreign businessmen caught eye of the village and met to discuss the prospects of a huge mining investment. Today their company owns much of the village, including its mayor. The image of a globe on a pale blue background has spread around the village ?  it is the logo of "Rosia Montana Gold Corporation S.A.", a joint venture by Canadian based "Gabriel Resources Limited" and the Romanian state. From time to time, a jeep arrives on the village square. It brings technicians and managers in dark sunglasses from the company’s headquarters to this outpost close to the mines. In the air is the contagion of gold fever.

From the Apuseni Mountains to the Caribbean

In 1997, Gabriel Resources Limited was founded. The company’s sole purpose is the extraction of Europe’s largest known gold resources, believed to be deposited in the Rosia Montana valley. Based in Canada and listed at the Toronto stock exchange, Gabriel Resources is legally registered in Barbados, a tiny tax haven in the Caribbean. The company’s founder is businessman Frank Timis, a Romanian emigre who made his fortune in Australia. One year before Timis first arrived to Rosia Montana, an Australian court had convicted him with the possession of heroin with intent to sell. It was not his first conviction.

Critics of the company point out that Timis’s dubious record is not the only indication of a Gabriel Resources connection to international drug money. One of the company’s strongest opponents is CEE Bankwatch Network, an international NGO that monitors projects funded by international financial organisations. The organisation claims that Gabriel Resources founding board member Ovidiu Tender,  a "Romanian businessman with interesting connections", received large amounts of money from Columbia. Suspected purpose: money laundry. Some say that Mr. Tender, who recently resigned from his position in the company, is the true engine behind the project.

Meanwhile, there are other problematic aspects to the company: Ecologists warn of an ecological disaster, because the company does not posses any previous mining experience. In contrast to this, some of the individuals working for the company seem to have rather too much experience in the field: According to CEE Bankwatch, two of the company’s former vice presidents worked for mining companies in Papua New Guinea and Ghana, where they were actively involved in human rights violations and responsible for severe ecological damage.

In Rosia Montana, the company plans to dig four open pits encircling the historic village. A large part of its current inhabitants will have to be resettled. Foregoing criticism by archaeologists, the company has promised to preserve the most valuable archaeological sites and also the village’s historical heart. However, in a private conference with their shareholders the company declared that technically it would be possible to merge the four pits. Hence, at least "technically" it seems possible that the oldest documented settlement in Romania will be gone forever.

The company claims that by digging the four pits, it would be cleaning up the mess left over by the course of a two thousand year mining history. There is some truth to this point. The sites of the new pits are historic mining sites with tailings containing toxic materials, but also a significant amount of gold. In earlier times, there didn’t exist a technology to refine ore with such a low concentration of gold. Today, such a technology exists: cyanide leaching. By exposing the tailings to a solution of water and cyanide, the remaining gold can be leached out and collected.

Due to the toxicity of cyanide, this is a risky technology. According to the American Academy of Sciences, 50 to 150 milligrams of cyanide is sufficient to cause the immediate death of a human being. In the past few years alone, several gold mines using the controversial technology became sites of spectacular ecological disasters. In Europe, the most infamous accident took place in 2000 at the Romanian Baia Mare mine, where the spill of a gold mine’s cyanide pond led to a large-scale ecological catastrophe along 800 km of the Tisza and Danube rivers.

The company’s plan foresees the conversion of the neighbouring valley of Corna into a storage pond, the final stage of the mine’s cyanide leaching system. Environmentalists  warn that the planned pond might set the stage for the next Baia Mare. Yet John Aston, the gold corporation’s environmental engineer, dismisses such criticisms as fairy tales: "This is a completely different technology. In contrast with what was done in Baia Mare, we will clean the leaching water before it comes to the pond. Thanks to this technology, the concentration of cyanide in the pond will be far below international standards."

What shall we make of these conflicting scenarios? We asked Georg Fischer, a Berlin based senior expert on mining and ecology: "If you read the company’s website, the project makes a very good impression. Cyanide is a dangerous substance, but successful operations in Australia and the US have shown that it is not impossible to manage the risks. However, everything depends on the existence of truly unbiased inspections. In regard to Rosia Montana,  I am sceptical. It is my impression that Gabriel Resources just promises what people want to hear. For example they claim to fulfil the EU directives on cyanide use. I had never heard about such directives. So I called the office of the European Commission’s environmental commissioner. I was told that there aren’t any EU directives on cyanide use. It seems quite likely that this company calms the public with nice-sounding propaganda, while it actually plans to reduce costs by taking dangerous risks. Without effective inspections, no one will hinder it from doing that."


The Village of the Billionaires

Hard men with experience in the African Jungle, working hand in hand with Romanian emigres, know that certain western rules don’t apply in good old Romania… Considering this mixture of people one is not surprised that the company seems to have believed that digging gold in cash-hungry Romania wouldn?t be much different from digging in the jungles of Africa: Purchase the politicians you need, sell your story well, and things will work out smoothly. And for quite a while, the developments in Rosia Montana seemed to validate their reckoning.  

Not surprisingly, a lot of the villagers in Rosia Montana didn’t like the idea of sacrificing their home village in the name of gold and progress. Thus, in the local elections of June 2000, more than seventy per cent of the villagers voted for the candidate Nariţa, being the only candidate for mayor who opposed the project. During the election campaign, the local businessman showed no restraint to use populist slogans. He promised to blockade the mine’s access roads and "to kick out the kangaroos within 48 hours."

Today Nariţa, wearing a black leather jacket and a golden bracelet, rules the little town from his shiny office where a model secretary serves coffee. Nariţa is not the only one who has changed his mind. Today, twelve out of fifteen members of the village council are official supporters of the project, and Ioan Rus, prefect in Alba County, stated that "only the stupid ones do not change their minds." In 1997, as part of the opposition, Rus had promised his voters: "We will arrest the whole company. The gold has to stay in Romania."

How shall we understand such dramatic turns? Not surprisingly, the company rejects any suggestions of corruption. But unofficially, even employees of the company admit that the millions of dollars which are poured into the community, have an alluring power that undermines any democratic self-government. Reckless businessmen like the mayor Nariţa anticipated that possessing power during this gold rush would offer great benefits. Having lured voters with populist promises, they used their political power to negotiate lucrative deals with the gold company. Thanks to large contracts between the corporation and his construction company, mayor Nariţa, already the richest man in Rosia Montana, became even richer. Meanwhile the daughter of prefect Ioan Rus found employment with one of the company’s subcontractors. In one way or another, the same can be said for the other supportive council members. This is the reason for Rosia Montana’s nickname in the region: "the village of billionaires."

The support of the local politicians allows the company to present itself as a transparent and law-abiding company, which knows about its social responsibilities. It is not the company which does the dirty work of breaking people’s resistance, but the corrupt local administration. The local administration arrested spontaneous protesters, sold both the water distribution system and public owned farming land to the mining company and "forgot" to repair an accidentally damaged access road to locals who resist relocation. To understand how a global corporation acts in a poor and corrupt environment like Rosia Montana, it is crucial to focus on the role of these intermediaries. Unlike the corporation, the intermediaries don’t have to be afraid of ruining their image. Everyone knows that they are corrupt; everyone seems to think that there is no way to change this.

From the Romanian environmentalist Stefania Simion we learn that in Romania this kind of backstage arrangements are called "trafic de influenţa". However, the influence of the Canadian company extends beyond the sphere of local politicians. While a few newspapers on the national level publish critical coverage of the Rosia Montana project, one will hardly find a word of doubt in the regional news. Open corruption, trafic de influenţa, or just the result of a convincing PR strategy?

In the regional capital Alba Iula we visit Mr. Ciul, editor-in-chief at UNIREA, a publishing house and regional newspaper, which is notorious for its support of the project. Not surprisingly, the friendly man with greying hair dismisses any accusations that he accepted bribes: "Our newspaper decided to back the international investment officially. It is only now that we will actually have a golden era", Mr. Ciul explains his company’s position, referring to Ceausescu’s times, which the communist propaganda used to call era de gold.
Interestingly, however, the publishing house makes a lot of money by printing numerous brochures and leaflets for the gold corporation. Also, limited to the area around Rosia Montana UNIREA used to give out the newspaper once a week for free, in which it featured a supplement on the Rosia Montana project. Mr. Ciul confirms this practice, which was recently repeated on the occasion of a big football match. However, he asserts that his publishing house covered the costs, "out of our desire to inform the local population about this important project".

Resettlement

In the village’s oldest part, most of the buildings are marked with a blue sign stating, "Property of Rosia Montana Gold Corporation." Last year, the company began purchasing buildings and lots in the village and its surroundings. Those who agreed to sell were compensated and moved away. Gradually marking more and more buildings, the blue signs bear a clear message for those who resist the plan: This project will take place and you will leave,  whether you like it or not.  

In the local store, we meet an elderly lady who had just sold her flat. She shows us the contract with the stamp of the gold corporation. Asked whether the compensation is acceptable to her, the lady seems satisfied: "The company pays town prices for village flats. With this money, I can buy a flat anywhere in Romania."
However, not everyone is so enthusiastic. Some people claim that the company’s intermediaries use threats and improper methods to convince those who refuse the company’s offers. We ask another old lady. Looking around nervously, making sure that none of "them" is passing by, she starts whispering stories of the methods used by the company’s agents: "They put the money on the table and said, "it would be better to take the money now. If you sign tomorrow we will pay you only half the sum.""

In the local community, the sudden influx of money poisoned the relations between the villagers, who had never before possessed large amounts of cash. We hear stories of people, who used their money to purchase great cars, only to drive them soon after into walls. John Aston confirms that such things happened: "The social consequences are indeed horrible. Yet we are trying to do our best. There is a separate agency, which tries to advise people about how to use the money in a responsible way. And often people showed responsibility. However, in many cases people don’t want to be told what to do, and say simply: "Fuck off, this is my money, I know best what to do with it.""

The company claims that it proceeds with its resettlement and compensation plan strictly according to the social guidelines of the World Bank. Yet sociologist Michael M. Cernea, one of the World Bank’s leading experts on resettlement issues, criticised the gold corporation severely:

Our research done on a global level shows a simple fact: sufficient compensation does not exist. For instance, the billion or billions paid for properties in Rosia Montana will have little value after the inhabitants leave their homes. By definition, the compensation only offers the inhabitants a simple payment, not more than the capital held before. When the resettler tries to redo his lost fortune, the cash payment operation transfers all risks onto him. Evidence demonstrates that the use of cash ends up with the acquisition of an amount of goods that is below the level of the amount of goods possessed before. Landowners in particular have a lot to lose because the prices for land immediately increase in the whole area. Rosia Montana Gold Corporation should not get away that easily, the people should receive shares from the profit until the project comes to its end. This is the present perspective of the World Bank.   

Centre of the Friendly Gentlemen

In the gold corporation’s headquarter in Alba Iula, we meet Mr. Adrian Dascalu, a former Reuters journalist
who recently became the head of the company’s PR agency. The polyglot gentleman seems delighted to meet with someone willing to listen to both sides. Supported by John Aston, the company’s environmental manager, Adrian Dascalu works hard to present his point of view. He talks of economic benefits (that the mining project will bring them), of the World Bank’s environmental and social mining guidelines (the company will stick to them), but also about their personal compassion for the grief of some old people who are much too old to handle the resettlement (the company will have to resettle them nonetheless).

At the same time, Mr Dascalu expresses his dislike for the various legends by which, he claims, the project’s opponents try to manipulate public opinion: "It is easy to make people afraid. In Romania, mining has a terrible reputation. People simply don’t believe that today there exist much cleaner technologies." His colleague adds: "By becoming bigger and more professional, once respectable organisations like Greenpeace became commercial entities. To secure their financial survival, they depend on successful campaigning. For this purpose, projects like ours are perfectly suited because here you find the three factors – local "victims",  a multinational investor, and a scenario of ecological disaster – which all are needed for an emotionally successful campaign."

We ask Mr Dascalu about a recent critical statement by Romania’s prime minister on the Rosia Montana project. He answers by first generally lamenting the poor quality of the Romanian media. In his view, it is most likely that the enemies of the project bought the newspaper that brought up this story. We ask Mr Dascalu, whether his company also relies on the opportunities created by a corrupt media environment. The friendly gentleman raises his voice: "You mean, do we bribe? No, we don’t bribe. Bribing is a double-sided sword, since it creates a double relationship. For us as a foreign investor, bribing would involve much too high risks."
Mr Dascalu is right, the risk is high indeed. After we left the company, one of the local student activists who had joined us for the meeting told us of his first encounter with Adrian Dascalu, who had shown interest in sponsoring some of the student organisation’s activities: "He wanted to take us to an expensive restaurant, but we insisted on going to the student pub. We wanted to order beer, but Adrian ordered Jack Daniels. Later he asked, whether we had ever dreamed of possessing a Land Rover. We told him that we are not for sale."

Crisis

There is a sense of something wrong here. We are but a small group of young journalists who had not even announced their arrival in advance. However, the company employees were generous in spending time with us, all in all about five hours. The next day, on a late Friday afternoon, Mr Dascalu was even so nice as to return from a trip to his vacation home to provide us with copies of the company’s material.

Not everyone is so lucky though. Only a few days after our visit, Mr Fischer, the above-quoted environmental expert from Berlin, wrote an e-mail to the company, asking them to clarify a number of questions about its plans for environmental protection. His biggest concern: Will there be an independent control agency? Not even an hour after having sent the message, Mr Fischer got a phone-call from Romania. On the other end of the line: Mr Dascalu. Yet Mr Dascalu didn’t call to answer Mr Fischer’s questions: "He asked who I am and why I would need this information." Mr Dascalu promised to respond to all his requests, yet to this day (even after having sent a reminder),  Mr Fischer waits for an answer.    

What is the secret behind Mr Dascalu’s nervousness? For quite a while, Frank Timis’s calculation – buying everyone who had a say in this country – seems to have worked quite well. Yet in April 2003, Frank Timis, Ovidiu Tender and two other members of the board resigned as directors, only shortly after the World Bank’s daughter organisation, IMF, had refused to support the project. In consequence,  the company’s shares lost more than half of their value. Today, most experts warn against buying shares from Gabriel Resources since the investment carries too many incalculable risks. Unofficially, we are told by one of the company’s employees that the project is on the edge of bankruptcy.

One reason for the project’s growing difficulties is a changing political environment: In 1997, Frank Timis was not alone in seeing Romania as an unstable and poor country with very little chances to ever join the European Union. Yet only three years later and fairly surprisingly, the European Union pronounced Romania an official candidacy for future membership. This strengthened the position of the project’s opponents, who predicted that the Rosia Montana project could become an obstacle to Romania’s EU accession. The accident in Baia Mare and the following tensions with Hungary, which today is suing Romania to compensate for the damage caused by the Baia Mare accident, powerfully reinforced the argument that irresponsible mining is too dangerous a risk.  

For the company, the implementation of EU regulations meant first of all that everything became much more time-consuming and expensive than expected. According to the Wall Street Journal, increasing security standards and delays raised costs to seventy per cent above initial estimates. More importantly, the company did not succeed in its plan to avoid public scrutiny by quietly securing the support of decision-makers and journalists. Anticipating these changes, the company saw its only chance in a radical re-invention of its image. The resignation of Frank Timis and his gang is one element of this survival strategy, another one is the appointment of nervous Mr. Dascalu, who is responsible for reshaping the company’s public image.

Speculators, Agitators, and Farmers

There is a lot of speculation in Rosia Montana about the exact origins of the obstacles, which brought Gabriel Resources into such difficulties. We asked John Aston, the company’s friendly environmental engineer: "It is not the activists here who cause us trouble. There is something political going on in Bucharest,  but we don’t really know who is our enemy. Some say it is the Hungarians, some blame Romanian nationalists, others point to big western environmental organisations."  Asked about "Alburnus Maior", the local civic organisation opposing the project, Mr Dascalu adds: "These people have little influence. It is not even a real environmental organisation. Most who joined the opposition did so because they hoped to negotiate, through these means, a higher price. Once I visited one of their leaders. We soon became friends, and after some hours of conversation, this guy said: "Adrian, if your company gives me 300,000 dollars, then I won’t give a shit about the environment."

We don’t know whether this story is true, but we can assume that Mr Dascalu is well aware that the environmentalists are much more influential than he is willing to admit. While it is plausible that a lot of the local members have joined "Alburnus Maior" for speculative reasons, it is not them, but a group of professional western environmentalists who lead the fight against the company. The key figure is Stephanie Roth, a Swiss activist who some years ago came from London to Romania to support local environmental groups. The readers of UNIREA know her as "the western lunatic". And one might indeed feel alienated by her rhetoric, which seems to tell of a radical disapproval of capitalism and Western modernity.

Yet it is the very world of globalised Western modernity, in which she admirably well knows how to pursue political aims. Alburnus Maior is part of a global coalition against the project, which seems much more professional than the company in influencing public opinion. It was, for example, Ms. Roth and some other western activists who personally convinced World Bank chief James Wolfensohn to not back the IMF in financing Gabriel Resources.

Ms. Roth brings us to the farmhouse of Eugen David, high in the Apuseni Mountains. The local farmer is the official president of "Alburnus Maior". Bread and cheese are served as well as palinca, the local liquor. Everything is home-made, from home-grown ingredients. In the garden, behind the thatch-roofed barn, stand two mounds of hay.  The landscape is beautiful and in the air is the sweet scent of fresh hay. Until recently, Mr David worked as a mining engineer in a state-owned nickel mine nearby, tending his farm only part time. He tells us that he quit the mining job "to show that it is possible to live from agriculture alone." Ms. Roth interrupts excitedly, asking: "And does he look badly nourished ? These people are perfectly happy. They don’t need modern homes with double-glassed windows."

Well, for the ecologically sensitive and somewhat nostalgic westerner, most of rural Romania looks like a picture from an old fairy tale. Yet the environmentalists’ propaganda shouldn’t distract us from the fact that people in rural Romania suffer from poverty. And there is no doubt that were the project to fail, the area would have to cope with great difficulties. Asked what will happen then, both foreign and local activists become strangely vague.

From the farmhouse, we walk with Eugen David to the top of the hill. Soon the fairytale picture develops a rift. On the left, maybe one or two kilometres from Eugen’s farm, a huge open mine is seen gaping in the mountain. It is the current gold mine of Rosia Montana. Walking farther up the hill, we see on the left a factory, marking the entrance to the nickel mine. Their remoteness and natural beauty notwithstanding, the Apuseni Mountains are a landscape with a long industrial heritage. Although not always an easy marriage, both farmers and miners have coexisted in the area for centuries. Yet as the gold mining project intended by the Rosia Montana Gold Corporation is of unprecedented proportions in Romania, its success would destroy what is left of the fragile equilibrium between agriculture and industrial development.  

On the top of the hill, Mr David gestures with his arm from left to right to show which hills would be levelled. Mr David is convinced that in the end, local resistance will prevail. However, he is aware that things will never be the way they were. In a sad moment he says: "We will win the fight, but we have already lost our community."

Jakob Hurrle

Marek Canek

This entry was posted in ROMANIA. Bookmark the permalink.

Comments are closed.

^ top