How can Roşia Montană help deliver on Mr. Schultz’s investment objectives for the EU

Written by Titus Capilnean

Titus Căpîlnean is Romanian, born and raised in the mining community of Baia Mare, Maramureș, a HULT Executive MBA graduate that has been connected with the Roșia Montană project since December 2010

European Parliament President Martin Schultz, recently declared that Europe needs an investment package to overcome low growth and high unemployment. Of note, he said the following:

“We need targeted investment in areas where, in the short term, it will stimulate the economy and create jobs and, in the long term, safeguard our children’s future. We need to invest in areas and projects which will generate the greatest value added.” (Source: Europa.eu website)

The Roşia Montană mining project and other similar projects across Europe, which extract natural resources with sustainability and social responsibility as core principles, together with the highest regard for environmental standards, will create jobs and welfare for local and national communities, and could contribute to fulfilling the growth objectives put forward by Mr. Schultz.

The World Gold Council reported in October that, in 2013, fifteen of its members surveyed employed over 160,000 people and had a total expenditure of $47.3 billion, out of which 79% ($37.4 billion) was spent inside the country of operation. Of that $37 billion, 88% benefited suppliers, local people and communities and only 12% went to national budgets. Imagine a European Union that is self-sustainable and prosperous thanks to its rational use of currently available resources and a sound exploration strategy. But to get there, the union and nations need to implement better regulatory systems and contribute to a better understanding of the role of industrial activity in every day life. And they need to act now, for extraction projects take several years to construct and operate before the long term benefits truly take shape.

Roşia Montană  a strategic project to demonstrate the EUs aims

I am going to talk strictly about Roşia Montană here, but the impacts can be extrapolated to other projects, as well.

Following the closure of over 500 poorly run state mines across Romania and massive layoffs in the Apuseni mining region in the run up to EU accession in 2007, the degree of unemployment rose to an unprecedented 80% of residents in that area. Today, in the village of Roşia Montană, the level of unemployment has risen further as almost every household is affected by a new wave of layoffs due to the stalled environmental permitting of the mining project. Yet this is an investment which is an immediate opportunity to stimulate economic growth and job creation in the region whilst exceeding all requirements on European Union and Romanian legislation on environment and developing a socially responsible and sustainable “poster child” mine for the resources industry in Europe.

The Roşia Montană mining project, through its contribution to infrastructure improvements, to environmental rehabilitation of the severely polluted areas affected by historic unregulated mining, to the restoration and enhancement of the areas cultural heritage that would otherwise be lost forever, is an investment opportunity to improve the way of life locally and increase the prospects of the Apuseni Mountains area to develop other investments in businesses which will secure the long term future of its people.

Mining is very important, if done responsibly and in total compliance with all European strict legislation. According to opinion polls, the vast majority of people want mining in Romania to restart on modern grounds; they want responsible and modern mining in our country, as it is practiced in other European countries.

Roşia Montană Economic benefits for Romania

Even if you have followed the Project then you are probably familiar with the Project’s economic benefits. But it’s worth taking note of them again. At US$1,200/oz gold and assuming a 25% state share, the business plan of the mining project provides for total benefits of approximately 5.3 billion US dollars for the Romanian economy. Out of this amount, 2.3 billion dollars will go towards the State budget. These funds include the dividends obtained by the Romanian State, royalties payable, as well as other taxes and duties paid directly to the local, regional and national State budget. The remaining 3.0 billion dollars will be spent in Romania in areas such as human resources, construction, electricity, materials, transportation, reagents, spare parts and others.

These amounts are a direct investment in the Romanian economy and will reach the workforce, SMEs and other entrepreneurial tradespeople and Romanian companies which will provide products and services to the Project, during the construction and operation phases.

Jobs for Romania, jobs at Roşia Montană

In addition to direct financial benefits, the Romanian State benefits from the Project’s economic direct and indirect impact. The mining project will create over 2,300 direct jobs during the mine construction phase, 880 direct jobs during mining operations and 3,600 jobs in total during operation. Needless to say, these jobs mean more to the local community than any billions distributed to the national budget.

Whilst the Roşia Montană mine would have a direct employment impact on the people in the local area, the Project will have an added employment impact further afield, benefitting, among others:

Foreign direct investments

The Roşia Montană Project would be a direct foreign investment of more than two billion dollars in the Romanian economy through the construction phase. Thereafter, the Project will have a significant economic impact, as noted above. The Roşia Montană mine has the potential to add more than $24 billion US dollars to Romania’s GDP over a three year construction period and sixteen year mine life. Perhaps more important still, the mine would be a standard bearer for a revitalized mining sector, and an encouragement for foreign direct investment into other sectors of business.

Delivering Roşia Montană means success for Romania and a boost to the EU

Successful permitting, then construction and operation of the mine will be highlighting that Romania is “open for business”, encouraging investors to seek opportunities in Romania and boosting growth in one of the poorest member states of the European Union.

Today, modern mining in Romania can only be done with private investments. Responsible mining can create jobs and prosperity for our community, while protecting and rehabilitating the environment at the same time. The area urgently needs jobs that will also help other companies in the area develop as suppliers of mining-related services and products.

Not only Romania, but the entire European Union must learn how to harvest the rewards of its plenitude of natural resources, be it gold, silver, copper, oil, gas or any other minerals, because only a healthy mix of industrial developments, agriculture, tourism and services can safeguard our children’s future.

We would not be the only ones, of course.