On October 10th, the International Finance Corporation (IFC), the World Bank’s private lending arm, announced that it would not financially support the controversial Rosia Montana gold mine project in Romania’s Apuseni mountains. 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 IFC 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”.
World Bank President James Wolfensohn, in an unusual intervention, directed IFC Executive Vice President Peter Woicke to drop loan negotiations during the World Bank’s annual meetings, according to a Bank official. The IFC‘s statement does not mention environmental and social concerns, only “indications from the sponsor that there is available commercial financing for the project, and our concern that IFC‘s involvement may require the company to proceed with the project more slowly than they wish”. But Bank officials said Wolfensohn had been affected by children drawings and a brief conversation with Romanian activists after a public forum in Washington DC (pictures). Other sources at the Bank report Wolfensohn was upset when he started looking into the social and environmental analysis of the project, and when he heard about Gabriel Resource’s founder and chairman Frank Timis drug convictions. According to Dundee Securities, Timis has two convictions for possessing heroin with the intent to sell. An earlier venture of Mr Timis, a Ukrainian petrol company, had been barred from the Toronto stock exchange.
Toronto-based company Gabriel Resources (registered in Barbados) had approached the IFC for a loan rumored to be approximately $250 million. The company has no previous mining experience. It is still unclear if the Bank’s decision could mean the end of the project in its current form. According to Gabriel Resources “sufficient capacity exists in the commercial equity and debt financing markets to continue the timely development of the Project”. But the Bank’s withdrawal is a blow to the project’s -and the company’s- credibility. The $400 million project would displace more than 2,000 people and tear down nearly 900 homes where the mine is planned. Environmentalists also opposed plans to build a 1,000-acre reservoir to collect cyanide tailings left over from the mining process.
Community leaders and NGOs are now urging the government of Romania and private lenders to give up the project which, if realised, would be Europe’s largest open-cast gold mining operation. Early October Gabriel was boasting about the “resettlement program successfully underway with strong local response and support”. In addition to the Rosia Montana project, Gabriel is engaged in further gold exploration work nearby.