The Complete and True Story of Rosia Montana


I didn’t need any television reports to tell me last night that the protests against mining in Rosia Montana were going strong – I could hear the drums and whistles well past 11 pm from my apartment here in Cluj-Napoca. A review of the media today tells me that similar large-scale protests occurred in Bucharest and other cities around the country.

And yet the question everybody keeps asking me (including Romanians who participated in the protests) is are the protests working?

Since today is officially the first day of school in Romania there will be two versions of my answer.

SHORT VERSION

Way back in the mid-1990’s the Romanian government thought there might be some money to be made by mining in Rosia Montana, an area so rich in resources that the Ancient Romans dug there to extract precious metals.

Knowing that more advanced and expensive mining methods were needed, the government sought investment from an outside firm, eventually choosing Gabriel Resources. Later the Romanian government and Gabriel Resources formed a new company, Rosia Montana Gold Corporation (RMGC), Gabriel Resources holding the majority share and the Romanian government holding a minority share.

RMGC’s goal is to extract several hundred tons of resources from the area of Rosia Montana however full-scale mining has yet to be given the go-ahead from the Romanian government more than 10 years later.

Starting last week and continuing yesterday, thousands of people have demonstrated against RMGC’s proposed mining operations. On Monday, September 9 (a week ago), the intrepid AP journalist Alison Mutler reported that Romanian Prime Minister Victor Ponta “predicts” that the parliament will not approve RMGC’s mining operations after facing pressure from protesters.

So did the protests work? Let’s have a look.

gabriel1week

Using the Yahoo! Finances website you can see the stock prices here for Gabriel Resources LTD, the mother company that owns a majority share in RMGC (which isn’t traded publicly). It’s pretty obvious that the protests in Romania “worked” in the sense that they dealt a huge blow to the stock price.

gabriel1month

Here’s another view, expanded out to the last month. You can see a minor fluctuation as the protests began to pick up steam but Ponta’s announcement that the parliament would not authorize the RMGC mining operations sent the stock price plummeting.

gabriel12years

Pulling back even further to show the last 12 years, you can see how Gabriel did well when Emil Boc, perceived to be friendly and sympathetic to the RMGC project, was elected prime minister. Despite all the chatter however, the RMGC project was never given the final authorization in the 3+ years of Boc’s time in office as the PM.

Ponta, during his time in the opposition, was perceived to be against the RMGC project so Gabriel’s stock sank like a stone when he assumed power in the coup of 2012. However, since becoming prime minister he started “coming around” to the idea of supporting RMGC. This however was given a major setback by the large-scale protests and now Gabriel Resources’s stock price is in the toilet.

The short answer is protests = pressure on Ponta = no authorization for now of RMGC = Gabriel Resources stockholders will revolt = every delay is good news for anyone opposing mining in Rosia Montana.

So yes, the protests “worked”.

The Long Version

Oh boy.

I never really researched the history of this entire debacle before but it’s quite an interesting tale. It begins way back in the Communist days, when Gheorghe Gheorghiu-Dej was the Supreme Ruler of Romania and a baby boy named Vasile Timiș was born in a tiny village in Maramures in 1963.

At some point when he was a teenager, he and his family managed to emigrate to Australia where he began calling himself Frank. He learned to speak English and developed a taste for fast, easy money. Frank got mixed up with the wrong kind of folks and was arrested for possession of a sizable quantity of heroin in the late 1980’s.

Frank learned from his mistakes and soon realized that there was far more profit to be made in spending other people’s money instead of taking personal risks. All you had to do to become rich was to convince people that you owned a (literal) gold mine.

Starting in Australia, that’s exactly what he did. He and his partners would form a limited liability company, acquire mining rights on a piece of land, gin up some feasibility reports and leverage this into getting investors to fund operations. If gold was actually found then everybody went home happy and made a profit. If little or no gold was found, Frank and his partners still walked away with a sizable chunk of the investors’ money.

After doing this several times, Frank realized there was far more money to be made if he moved to Britain, where he now lives. He repeated the same formula of forming limited liability companies, owning or being on the board of dozens of them, and branched out into diamond mining and petroleum extraction in many former British colonies, including Sierra Leone.

While occasionally some of these companies made a profit for his investors, most of Frank’s commercial ventures have been complete failures. He drew heavy fire in the British press when one of his companies, “Regal Petroleum” fraudulently reported that it had discovered enormous oil deposits in Greece in 2003. Once the announcement drove up share prices, Frank liquidated his position in the company, making a substantial profit for himself but left the investors to take the fall once it was finally discovered that the oilfields in Greece were not even worth drilling.

Along the line someone from the old country (Romania) told Frank about the largely abandoned mines in Rosia Montana. Frank used one of his companies, Gabriel Resources, which is listed on the Toronto stock exchange (but originally set up in Barbados for tax evasion purposes) but no more Canadian than Roman Copper, the company which almost bought Cupru Min last year, to set up a partnership deal with the Romanian government.

Originally the first partnership was between the Romanian government and Newmont Mining (an American mining company with its own shady history) but Newmont was acquired by Gabriel Resources (which is only an investment firm and not a mining firm) a couple of years later.

Like all big contracts involving the Romanian government with foreign firms, the exact details of the deal are entirely secret and have never been revealed to the public. All we know (via the media) is that supposedly Gabriel Resources owns 80.69% of the RMGC company, 0.23% is owned by “minority investors” who have never been identified and the rest is owned by the Romanian government under the auspices of CNCAF Invest, formerly Minvest Deva. There is a persistent rumor (until the documents become public, no one will know) that Newmont Mining “won” the contract the day before it was supposedly put to a public bid.

Since RMGC was formed in 1997 with the potential of extracting several tons of gold and silver and other resources, it looked like it would be clear sailing ahead. The government under the leadership of President Constantinescu in cooperation with Prime Minister Victor Ciorbea was ready to help fast-track all the environmental studies and permits that RMGC would need to begin mining.

RMGC (via Gabriel Resources) used the assurances by the Romanian government to raise huge amounts of capital which they then used partly to start buying up property. While the area of Rosia Montana had been mined since Ancient Roman times, what RMGC was planning was a leviathan of open cast mining, essentially leveling four mountain tops and digging a gigantic pit. All of that ore-bearing soil would then be soaked in cyanide, burning off the dirt and leaving the precious metals to be easily extracted and the lake of cyanide to remain behind in perpetuity.

Despite some limited but fierce opposition from local residents, who formed an organization called Alburnus Maior (the Ancient Roman name for the area), RMGC steamrollered ahead, disinterring bodies from several cemeteries and buying up church-owned and private property until they owned a vast swathe of land. Most of the residents were in support of the project because the RMGC project promised to provide thousands of mining jobs, which are very well paid in this country (about four times higher than a teacher’s salary).

And all was well for RMGC until a stubborn Swiss woman named Stephanie Danielle Roth heard about what was going on.

As a journalist focusing on environmental and ecological issues, Stephanie Roth was working at the time in Sighisoara to oppose the proposed creation of Dracula Park, a vampire-themed amusement park (that never came to fruition) in 2002. She heard about what was going on at Rosia Montana and decided to investigate, a decision that changed her life.

She was so moved by the issue that she emigrated to Romania, living and working in Rosia Montana full-time while writing regularly on the subject for an influential British magazine called The Ecologist. This helped to bring global attention to Rosia Montana for the first time and she and her supporters credit her work to influencing the World Bank not to invest in the RMGC project in 2003.

Stephanie Roth’s reporting netted her a coveted Goldman Environmental Prize in 2005, which came with a large cash payout (125,000 dollars), allowing her to continue to finance her opposition to the RMGC project. It also allowed her to parallel the activities of her adversary, leveraging the prestige of winning the Goldman Prize to raise funds from other NGOs that oppose RMGC on environmental and political grounds.

Now Stephanie Roth and Alburnus Maior had the money and organizational support to organize the first wide-scale protests, which led to more media attention. At one point the Soros Open Foundation also became a sponsor of the anti-RMGC movement and despite my best ability to research it, I don’t know whether this is still true today.

What I do know is that the battle lines have been drawn ever since. Protests against the RMGC project have been incredibly well-organized, far better than anything I have ever seen or heard about in post-1989 Romanian history. Mining experts, cultural experts, ecological experts and a wide coalition of NGOs and activists have coordinated to sustain their ongoing opposition to the project.

Over the years the subject of Rosia Montana has become a household topic where everyone knows at least a little about it. Annually there are musical concerts held in Rosia Montana to sustain the town’s cultural heritage and organize opposition to the RMGC mining project.

The opposition also have an professional logo in the form of a red and green leaf that you can see absolutely everywhere:

save rosia montana

Large-scale protests did not begin in 2013 but have been ongoing for years. In 2012 some anti-RMGC activists “took over” the Hotel Continental here in downtown Cluj, covering the building with enormous signs (all bearing the branded red/green leaf logo). Flags, T-shirts, stickers and posters, not to mention spray-painted “graffiti” on town walls are also a regular sight.

The opposition to the RMGC also has successfully gotten many op-ed pieces published in widely-read news portals such as The Guardian and the Huffington Post, which help backend AP wire pieces like the ones Alison Mutler sends out. Likewise the opposition has richly detailed and colorful graphics such as this one (click on the image for full-size):

Rosia-Montana-InfoGraphic

Despite a few spelling errors, it’s a powerful graphic and it’s been used in posts all over the world, including several campaigns on Facebook.

On one side therefore you have a few politicians (including President Basescu, who is currently professing complete neutrality on the issue) who clearly were or are supporters of the RMGC project. Many residents of the Rosia Montana region, who depend on mining for their livelihood, have also protested in favor of the project, with a handful of miners threatening to hold a hunger strike and remain underground indefinitely last week.

Ponta’s bitch and former partner in crime, Dan Sova, is trying to keep the RMGC project afloat by uttering scary pronouncements about Gabriel Resources suing the Romanian government for “billions” of dollars for breach of contract, which is largely why the protests continue. However I highly doubt that Frank and his fast cash buddies have the stones to endure lengthy litigation and so Sova is mostly crying wolf here, in my opinion.

On the other side you have a well-organized and well-financed opposition which yes, does include the genuine and voluntary support of thousands of mostly young, well-educated city dwellers in Romania.

I personally know a dozen people who sincerely oppose the gigantic cyanide pit, the leveling of four mountains, the destruction of an entire town all for the sake of a handful of jobs and that’s why they were protesting in the past few days and weeks (and some for years). But it’s clear that there’s a hidden hand at work here, paying for the banners and flags, printing up the flyers and coordinating the protest permits.

And so this news story is being sold to the domestic and international press as a triumph of democracy with thousands of people peacefully demonstrating in the streets, which I suppose it is, but underneath it all is the tale of a greedy Romanian con man and a hippy Swiss woman.

The thousands of people in the streets are genuinely upset but the seed that first grew this opposition came in the form of a single woman, Stephanie Roth, who used her global exposure to bring attention and raise funds to support the work of the handful of Rosia Montana residents that dared to resist the RMGC project.

And somewhere in a luxuriously appointed home in London, Vasile “Frank” Timis is cursing and pulling his hair out because a nerdy Swiss journalist’s persistence has just outfoxed him, causing his shareholders to lose millions of dollars, ruining his decade-long dream of polluting his former country for fun and profit.

AND NOW YOU KNOW!

For an article about Roth in Romanian, hai tu arunci un clic p’aici and for one of her old 2005 “diaries” on her activism in Rosia Montana written in English, you can click here.

27 Comments Add yours

  1. oana says:

    We wish that this lady Stephanie (sorry if i didnt spell corect) to be part of our gouvernment.Our gouvernment is full of greedy suckers

    Like

  2. Calin says:

    It is true, the opposition is well organized and well financed, but they have used their clout to cover up the truth (with brightly coloured infographics which depict mostly lies, amongst other things) and the voice of the people from Rosia Montana. The fact of the matter is the people there want the mining project to start, it’s their only real hope for jobs and for a better life. And the fact of the matter is that three mountains won’t be destroyed, as the old state-run mine will be continued, towns won’t be destroyed and there won’t be any cyanide lake. But it seems that the truth gets lost beneath shares and likes and well-financed activists.

    Like

    1. Dee says:

      “Cyanide: a safe technology” is the kind of information being put out by the company itself; I grew up in an area that environmentally suffers because of abandoned mining operations, and it is not pretty. The question is whether the environmental and cultural consequences of this project are worth jobs that are promised to last for only 16 years. No matter what you say, the landscape will be irrevocably changed, and Romania must rely on a foreign company with an already nefarious history to live up to their promises about rehabilitation of the environment and storage of used chemicals. It is gambling.

      Like

    2. Mihai C. says:

      Actually there will be a cyanide lake, not even RMGC denies this. They are just saying that they will take all necessary precautions for the lake not to break the dam.

      But pollution aside, I still don’t want this project to go ahead because they are robbing us blind. The redevence is ridiculously low, the economical benefits presented by Ponta are mathematically wrong and for a few hundred jobs we would be better off paying those people for staying home.
      After all we pay for thousands of useless (or worse) officials, couple of hundreds poor souls won’t make any difference…

      Like

  3. Mihai C. says:

    As a lawyer, I would like to point out that it’s impossible to say now whether RMGC will win in court or not because it all depends on what the contract says and – as you’ve mentioned – the contract is secret. Every word counts so until we have the full contract with all addendums and annexes we’re just guessing.
    Also important is who signed the contract and how because I have a feeling that the contract was signed without all necessary authorizations and permits and a contract concluded in an illegal manner may be declared null – in which case it won’t matter what the contract stipulates. The very fact that they are keeping everything secret shows that all is not well.

    My guess is that RMGC would not win in court IF the state is represented properly.

    Like

    1. Sair Jay says:

      Mihai, I’m a teacher, not a lawyer and have no knowledge of business/corporate law. This may be a stupid question but I’ll risk it (!!) and ask anyway: Is it actually legal to keep this contract secret now that it is a matter of such international interest? What would be enough (if anything?) to MAKE them publicise the contract in its entirety? Could there be a court order declared to force such an unmasking of it? Of course it stinks of fishiness.

      Here’s a link to the “Agreement between the Government of Canada and the Government of the Republic of Romania for the Promotion and Reciprocal Protection of Investments” http://www.sice.oas.org/Investment/BITSbyCountry/BITs/CAN_Romania_e.asp if you haven’t already seen it (I’m guessing you have), but there aren’t any actual figures. My question is, is there ANYTHING that would oblige the complete contract to enter the public domaine?

      Sorry to be dim. I’m sure it IS a really daft question, but… if you don’t ask, you never learn!

      Like

      1. Anonymous says:

        First of all, it is never wrong to ask and even if it were, as someone once said, it is better to ask stupid questions than to make stupid mistakes. That’s the rule I go by anyway. :-)

        Now to the point: there is no law to explicitly force the authorities to make the contract public. Since the authorities (respectively the Government and the Parlament) issue the laws, you can imagine they would never issue a law which would stop them from doing their dirty businesses in secrecy.
        I am trying not to get too much into boring legal stuff so in brief the situation is that since no law explicitly requires the contract to be public, the authorities have declared it secret. The courts cannot demand the contract to become public because the courts only have the right (and obligation) to apply the law (good or bad – as it is) and the law for state secrets does not grant them this prerogative.

        So the courts (and us citizen) do not have the laws on our side; not “regular” laws at least. My opinion however is that a secret contract for a public property of this sort is unconstitutional. But that is just my opinion and I am sure that a request like this in court would raise a lot of eyebrows.

        Like

      2. Mihai C. says:

        I have replied to your question, Sair Jay, I do not know why my answer has not appeared…

        Like

  4. andrew says:

    @Sair Jay

    Normally RMGC wouldn’t win in the courts, at least that’s what some commerce analysts say: http://www.ziare.com/rosia-montana/gabriel-resources/rosia-montana-ce-spun-avocatii-in-drept-comercial-despre-sansele-unui-proces-impotriva-romaniei-1256414 (if you read romanian)

    As for the international courts, even if they won I think a PM or the president has a final say on whether the fine is paid. Of course this would take some balls.. but is doable (Obama did it recently with an ITC decision on iphones).

    Anyway, this is far from over and by the way these companies do business elsewhere this might escalate to more ugly stuff. So, ’till the next one at the Trocadéro!

    Like

    1. Sair Jay says:

      Yes, I do read Romanian – thanks for the link, Andrew :) Let’s hope Oana Stratula is right. I’m not so sure. You can bet both your arms that RMGC will have the most expensive and the most superb (not to mention sneaky) lawyers representing them should need be. I’m not sure they’re stupid enough to leave themselves open to a loss such as this would be for them without putting up one helluva fight. Still, it remains to be seen, and here’s hoping both you and Mihai C (comment below) are correct.

      Indeed, see you at the ‘next one’ – pl. Stravinsky rather than Trocadero – we’ll have Brancusi nearby to lend his support in spirit ;)

      Like

  5. Sair Jay says:

    Nice one, Sam! Bravoooo!!

    I’d just like to add one thing that a FB friend of mine told me about this evening – Gabriel can VERY well slap Ro with a 4bn$ lawsuit for breach of contract – and they probably will and win too. MNCs sue governments to secure their own investments all the time: http://economictimes.indiatimes.com/news/economy/finance/bilateral-investment-pacts-how-mncs-sue-governments-to-secure-their-investments/articleshow/12557637.cms?intenttarget=no

    It has been done over and over again (it’s sotypically Frank, don’t you think?), see these two examples, both of them terribly parallel to the present situation re: Romania’s potential ‘breach’ of contract with Gabriel Resources: 1) http://www.iareporter.com/articles/20120207_2 2) http://www.fool.com/investing/businesswire/2013/02/08/tribunal-finds-ecuador-in-breach-of-its-obligation.aspx Gabriel has a very real gripe with Romania (not to mention Stephanie – I hope she has bodyguards 24/7, God bless her) and will sue their popos off IF the project/contract is permanently thrown out – the demand made by Alburnus Maior. I hope to God it is (I was at Pta Universitatii in early September for 2 protests and we’ve got a good crowd here in Paris protesting in solidarity too) – a 4bn$ lawsuit payout is a mere walk in the park compared to the horrors of cyanide (and mercury) and all that it will leave behind for generations to come. When Tanase (director of RMGC) promised the people of Rosia Montana that after the gold had all been extracted and they’d packed up and left, no one would ever know they’d been there, what he meant was ‘you’ll all be dead from cyanide poisoning, your women infertile, your men sterile – there’ll be no witnesses left in this tiny, boring, uninteresting little town’. Swine. May he have agonising piles til the end of his days along with Frank Timis and all the rest of them…

    Uniti, salvam Rosia Montana!!

    Like

  6. Vale says:

    Great article, very informative! Danke.

    Like

  7. Robert Macfarlane says:

    Wow. I am just so impressed.

    Like

  8. Nadia Laribi says:

    Long life to Mrs Roth! Salvati Rosia Montana! Thanks Sam for this interesting article which I shared on FB for the benefit of all the protesters…

    Like

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