Editorial: Foreign miners gaining ground in Romania (September 27, 2006)

Chopped up as they are by so many political boundaries, it’s sometimes easy to forget how large and rich are the mineral belts that snake their way through southeastern Europe, from Slovakia down to Turkey.

Poked, probed and exploited by miners over the millennia, the belts’ arcs and structural zones have hosted a historical resource of some 250 million ounces of gold, the mining of which has enriched so many empires.

Some of the least explored portions of the belts lie in the Carpathian and Apuseni mountains of western Romania, but that’s now starting to change, as foreign miners take advantage of the country’s adoption of a free market economy and its ongoing integration with the European Union.

Although it’s not quite official yet, Romania and Bulgaria will be joining the EU on New Year’s Day, adding about 22 million and 8 million citizens, respectively, to the union’s current population of 450 million. (Romania joined NATO already, in 2004.)

While Romania was once the weaker of the two candidates, its rapid move towards adopting stringent EU standards in everything from its court system to hog farming has made it the stronger one. Bulgaria, on the other hand, continues to be mired in political corruption, assassinations and criminal gang culture, causing many in the EU to question the wisdom of letting the country in.

Another worry among the existing 25 EU members is that they’ll see a flood of job seekers from Romania and Bulgaria, which have a per-capita economic output only about one-third of the EU average.

Still, Romania’s commodity-focused economy is improving steadily. Gross domestic product has been growing around 5% annually so far this decade, with little inflation except for a real estate boom in the cities.

In the minerals sector, Romania has a long history of mining for coal, gold, copper and industrial minerals, and EU integration means big changes here: the country’s heavily subsidized state-owned mining companies must take their unprofitable operations and either shut them down, joint venture them, or privatize them. The biggest exception to this edict is the state-owned coal mines, which provide 40% the country’s power supply.

The mine closures have already started in western Romania’s mining camps, throwing the unemployment rates to 75% in areas surrounding projects such as Gabriel Resources’ Rosia Montana — long the target of foreign-funded, anti-mining, non-governmental organizations.

The painful closings of some 400 decrepit mines in Romania — long predicted but now becoming a reality — are only driving home the point that new, high-quality mines in the Carpathians and the Apuseni are critical to generating employment in the country’s poorest region.

Gabriel’s improved efforts this past year at explaining the many benefits of its project, coupled with nearby mine closures, are at long last winning over Romanian opponents to Rosia Montana — and underscoring the foolishness of listening to the shrill rants of a few local NGO members who quietly make a very good living from their obstinacy while damning their neighbours to poverty.

While Gabriel continues to grab all the headlines in the mainstream media, two other foreign mining juniors are making real progress in west-central Romania.London-based European Goldfields is steadily jumping through the necessary regulatory hoops as it weighs development options for its advanced-stage, 1.8-million-ounce Certej gold deposit south of Rosia Montana.

A little farther south, Toronto-based Carpathian Gold is quickly adding tonnage to its twin gold-copper porphyry deposits, named Rovina and Colnic, where drilling has already encountered long intersections of economic-grade gold and copper mineralization.

So, after all the years of turmoil, the good news is that early next decade we’ll likely see three significant new gold mines in operation in the region — Rosia Montana, Certej and Rovina-Colnic — and Romanians can feel a little pride in their taking a leading role in the rejuvenation of mining in southeastern Europe.