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The Toronto mining company whose 15-year effort to open Europe’s biggest gold project has gone nowhere is preparing an international arbitration case against the Romanian government that would seek billions of dollars in damages.
Gabriel Resources is making plans for the case, which probably would be heard in Vienna in the second half of the year, as it starts to wind down its activities in Romania’s Transylvania region to conserve cash. About 400 employees, or 80 per cent, of Gabriel’s Romanian subsidiary, Rosia Montana Gold Corp. (RMGC), have been suspended at three-quarters pay. The company has said it may fire them in May “if there is no progress in the advancement of the project.”
Gabriel, which is listed on the Toronto stock exchange but run from London, is not expecting a breakthrough any time soon. The Romanian parliament’s chamber of deputies is scheduled to vote on a bill that would give special legal status to the $1.5-billion (U.S.) project, allowing it to go ahead, on May 7.
But the company does not expect the vote to go in its favour, partly because public opposition to the mine and its cyanide-based extraction technology remains strong. Timing is also an issue. Since it’s the last item on that day’s agenda, there is a good chance the parliamentary session will end before reaching the RMGC vote.
Gabriel threatened to sue the Romanian government last September for up to $4-billion “for multiple breaches of investment treaties.” At the same time, Gabriel’s Irish CEO, Jonathan Henry, the company’s sixth boss since the mid-1990s, warned that the government’s failure to approve the project would damage all of Romania. “Our case is very strong and we will make it very public that Romania’s effort to attract foreign investment will suffer greatly,” he said.
His comments triggered an anti-Gabriel backlash across Romania, after which Gabriel appeared to tone down its threats to go after the government. In a statement issued on Sept. 11, Gabriel chairman Keith Hulley said, “We will acknowledge any decision taken by the Romanian government or Parliament concerning Rosia Montana.”
The preparations for the arbitration case indicate that Gabriel’s threat is still very much alive. The company will give no details of its strategy, however, and has not said which investment treaties it would use to support its case.
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