Why A Canadian Mining Company Is Suing Romania for $4.4 Billion

Geamana village Romania

Canadian mining company Gabriel Resources is suing Romania for $4.4 billion through a secretive tribunal after the country denied permits for the largest open-pit gold and silver mine in Europe — a project Canadian officials advocated for, according to documents obtained by DeSmog Canada.

Since 1997, the Canadian mining company (fun fact: it was founded by a man convicted twice of heroin possession), has pressured Romania to allow the construction of the proposed mine in northwest Romania.

The mine would destroy three villages, level four mountains and displace 2,000 people.

Tens of thousands of people marched against the Roșia Montană project in 2013 — the same year the Romanian parliament rejected permits for the mine’s construction. Since then, Romania has applied for the site to be designated as a UNESCO World Heritage Site.

Location of Roșia Montană mine. Image via Gabriel Resources

Canadian Ambassadors Advocated For Mine

Hundreds of pages of documents obtained by DeSmog Canada via Mining Watch Romania  — a distinct organization from Canada’s MiningWatch — show Canadian officials have vocally advocated for the mine, which would access the largest undeveloped gold deposit in Europe.  

The documents are a portion of the thousands of pages released to Eugen Melinte of Mining Watch Romaina through Canada’s Access to Information legislation. The materials contain internal Department of Foreign Affairs and International Trade correspondence regarding the Roșia Montană mine going back to 2004.

A 2007 e-mail featuring the subject “Rosia Montana good news” sent from a Canadian embassy staffer to Canada’s senior trade commissioner in Romania noted that an “ardent supporter of the Gabriel Resources project” was re-elected as mayor and a “congratulations phone call might be appropriate.”

In an e-mail from 2008 a trade commissioner with Foreign Affairs and International Trade Canada clearly stated: “Our embassies in Bucharest, Brussels and London have provided extensive support to Gabriel Resources, such as offering business development advice and facilitating meetings with key decision makers.”

The documents show former Canadian ambassador to Romania Raphael Girard later joined the board of Gabriel Resources, worked as a lobbyist for the company and used connections inside the ministry to push for the project.

Marta Moszczenska, the ambassador who took Girard’s place, also advocated strongly for the Roșia Montană mine.

Melinte shared documentation with DeSmog Canada showing Canadian officials used foreign diplomatic meetings to discuss the mining project with Romanian counterparts, often when mining was not officially on the meeting agenda.

They hunt down the decision makers in unrelated meetings,” Melinte said in an interview.

Let’s say there’s a meeting for all the Francophone countries. When the Canadian official would meet the Romanian counterpart, they would discuss particular mining projects. I found traces also in NATO meetings….NATO is about defence, not mining. Yet when they would meet, they would put this on the agenda.”

The internal documents include briefing notes prepared for then-prime minister Stephen Harper in advance of a meeting with the prime minister of Romania. Those notes included suggestions to “address the issue of Rosia Montana” and advise “a broader point should be made to the Romanian PM about the risk of creating an unfavourable investment climate in Romania.”

Bizarrely, the documents also detail a Canadian embassy recommendation that Gabriel Resources meet with Prince Charles, a vocal critic of the project.

The company was not successful in arranging that meeting, Melinte said.

I think it is important that [the company’s] side of the story be told to the most important influencers that have already been approached by the project’s opponents,” wrote David McGregor, senior trade commissioner at the Canadian embassy in Romania, in a 2005 e-mail. “Our mandate now includes supporting [Canadian] investors.”

When asked by DeSmog Canada if the Canadian government still supports the construction of the mine, a spokesperson from Global Affairs Canada responded: “This is a matter between Gabriel Resources and the Government of Romania.”

Government of Canada, Gabriel Resources Rosia Montana ATIP Selections by DeSmog Canada on Scribd

Excerpts from documents released via Access to Information laws containing internal Department of Foreign Affairs and International Trade correspondence regarding the Roșia Montană mine.

Tailings Breaches Spilled Millions of Cubic Metres of Mine Waste in Romania, Hungary

The Roșia Montană mine would produce 300 tonnes of gold and 1,400 tonnes of silver.

The process itself would require the use of cyanide to remove the gold from rock, an extremely controversial practice that in part triggered the 2013 protests. Some 200 million tonnes of mine waste, known as tailings, would be stored behind a dam proposed for the scenic Corna valley.

There have been a series of catastrophic tailings breaches in the area. In 2000, a Romanian gold mine breach spilled 100,000 cubic metres of mine waste — including 100 tonnes of cyanide — into a tributary of the Danube River, killing all plant and animal life in the water for hundreds of kilometres. The catastrophic Ajka alumina plant spill in neighbouring Hungary released one million cubic litres of waste in 2010, killing 10 people and injuring another 150.

Local residents are wary the Roșia Montană mine’s cyanide-tainted waste might leak or spill, despite the company’s assurance that the tailings dam will be “100 times safer than a usual tailing dam.”

The company continues to purchase land in the mine’s proposed region, where some residents refuse to relinquish their land rights.

Gabriel Resources failed to respond to multiple interview requests made by DeSmog Canada.

Investor-State Trade Deals Pose Threat to Environmental Protections

Romania has until 2019 to respond to Gabriel Resources’ $4.4 billion suit.

The challenge is filed via an “investor-state dispute settlement” (ISDS) based on both Canada-Romania and United Kingdom-Romania business investment treaties.

The threat to Romania’s national sovereignty and environmental protections is especially relevant in light of ongoing negotiations of trade agreements including NAFTA, TPP and CETA.

The case also highlights the exorbitant amount companies can claim through investor-state trade deals.

It is a huge amount of claimed compensation, based mainly on the company's hoped-for future profits if the mine were allowed to go ahead,” Gus Van Harten, associate professor at York University Osgoode Hall Law School and expert in international investment treaties, told DeSmog Canada.

There are many other ISDS cases in which the foreign investor claims billions,” Van Harten said. “Claimants sometimes inflate the amounts at stake in a dispute as a bargaining tactic to intensify pressure on a country.”

It’s been estimated that Gabriel Resources has spent $700 million to date trying to pull off the project, including helping to fund a pro-mine documentary called “Mine Your Own Business.”

The secretive and often punitive process of investor-state compensation claims occur behind the closed doors of international tribunals.

Van Harten said investor-state dispute settlement should be abolished.

The current system serves as “an institution of globalization that is stacked in favour of the least vulnerable and against ordinary people,” he said.

Three-Quarters of Global Mining Companies Headquartered in Canada

Pressure is mounting on Romanians struggling to prevent the Roșia Montană project.

In late August, the Romanian prime minister suggested he’s strongly considering withdrawing the country’s application for a UNESCO World Heritage Site, leaving the door open for future development “maybe after 20 years, when technologies will advance and we will no longer use cyanide.”

We will try to withdraw it, to write that we no longer support the same point of view, which will put us in a very strange position with the international organizations,” he said in a televised discussion and quoted in the Guardian. “If things remain final, it’s all over.”

Canada is home to 50 per cent of the publicly listed mining companies in the world and has no significant legislation to guide the practices of companies operating overseas.

Canada’s Corruption of Foreign Public Officials Act is often criticized for its weak scope and enforcement. Since its introduced in 1999, only one individual and three companies have been convicted under the act.

Melinte said Canada also backs mining projects in South America and Greece.

Wherever they have a mining project, they support it fully regardless of the consequences,” he said. “They’re not oblivious to the consequences: they just pretend they don’t know.”

image: The submerged village of Geamana, Romania was flooded to create a tailings pond for a mine in the 1970s. Photo: Vasile Hurghis via Flickr

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