Dundee fights for its rights in Bulgaria (June 18, 2007)

Dundee Precious Metals (DPM-T, DPMLF-O) is finding out just what an impediment one politician can be — especially in a former communist country still coming to terms with the free market.

On May 6, Dundee filed a complaint with the European Commission against the Bulgarian government because of the actions — or more precisely, the inaction — of its Minister of Environment and Waters, Dzhevdet Chakarov.

The complaint is the result of Chakarov’s refusal to provide the final signature on two separate permits. One is needed for the expansion of Dundee’s Chelopech gold-copper mine, the other, for the construction of a mine at its Krumovgrad gold project.

Romanian media has reported that Chakarov is looking for more revenue from the projects, but Dundee spokesperson Gabriela Sanchez says that’s not in his power.

“(Higher concessions) don’t fall under his jurisdiction, they fall under the jurisdiction of the minister of economic development,” she says.

Sanchez says that the minister of economic development is supportive of the projects.

At Chelopech, the company is looking to build an autoclave and metals production facility and ramp up production to 2 million tonnes of copper and gold concentrate annually from 70,000 tonnes.

The environmental impact assessment (EIA) for the expansion has been approved by the Supreme Expert Environmental Council (SEEC) — a government body made up of a number of groups affected by the project, including the Ministry of Health, surrounding communities and non-governmental organizations. Only Chakarov’s signature is needed to move ahead.

Despite a court ruling which stated Chakarov must decide either for or against the expansion, the minister said that he would likely ask Dundee to carry out another EIA.

As for Krumovgrad, Chakarov hasn’t even filed Dundee’s environmental impact assessment with the SEEC.

The company says no reason has been given for the delay.

Dundee insists that the environmental study for Chelopech meets all Bulgarian and EU environmental standards and that Chakarov hasn’t given any lawful reason for his inaction.

“He’s not interested in fostering foreign investment,” Sanchez says. “It’s not an environmental issue; it’s very clearly a political issue.”

While Sanchez doesn’t expect the EU to secure the required signature, she says making the complaint with the commission is still important.

“Our intention is to put it in front of the EU that Bulgaria is failing to comply and that it has internal problems,” she says.

The EU Commission will decide whether or not to open an infringement procedure against Bulgaria for failing to comply with its European treaty obligations.

Dundee acquired Chelopech and Krumovgrad in an auction after they were put into receivership in September 2003; the sale was government approved.

The conflict with Chakarov has led Dundee to consider its options.

On June 6, it announced it had secured agreements to sell concentrates from Chelopech up until 2009. Those contracts will “buy some time” for the project, Sanchez says, while the company looks to find another location for the autoclave.

Should another location be found, Sanchez says ore will continue to be taken from Chelopech, but would be processed outside of the country.

The sales contracts are for between 40,000 and 75,000 tonnes of concentrate for 2008 and between 30,000 and 80,000 tonnes for 2009.

The company says the contracts address the short-term commercial and economic issues confronting the project and ensure the mine will continue to operate until at least 2009.