Wall Street Journal (10/11)
World Bank Chief Blocks Romanian Gold-Mine Loan
By Neil King Jr.
WASHINGTON -- World Bank President James Wolfensohn has killed agency participation in a $250 million loan for a Canadian gold- mining investment in Romania that drew fire from environmentalist groups.
International Finance Corp., the bank's private-sector lending arm, was negotiating with Toronto-based Gabriel Resources Ltd. to back a project creating the largest open-pit gold mine in Europe. The $400 million Rosia Montana 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.
Mr. Wolfensohn, in an unusual intervention, directed IFC head Peter Woicke to drop loan negotiations two weeks ago during the World Bank's annual meeting, according to a bank official. The IFC, which was still studying the project's possible environmental impact, began formally advising involved parties of the decision yesterday. The bank's involvement wouldn't have exceeded $100 million.
The bank has come under heavy criticism for backing environmentally dubious projects around the world. Activists who demonstrated against the bank during the annual meeting singled out the Rosia Montana project as one example of how it invests in disruptive projects. The World Bank official, citing environment and social concerns in its decision to back away from the project, said the case was "an example of how we're seeking to have an open dialogue with all our development partners."
Carol Welch, deputy international director at the environmental group Friends of the Earth, said the decision is "definitely a victory," but added that it also shows how much pressure the bank faces to stay out of big mining projects.
Mr. Wolfensohn decided against the project after talking briefly with two Romanian environmental activists who met the bank president at the end of a seminar, the bank official said. The Romanian government, which supports the project, fought to bar the activists from attending the World Bank meetings, the official said.
Gabriel Resources, which is traded on the Toronto Stock Exchange, estimates the mine could unearth more than 10 million ounces of gold over 15 years. Robin Hickson, Gabriel's president, said the company fully intends to proceed without IFC support, using private debt and equity financing. The company approached the IFC, he said, primarily in the interest of gaining environmental and social assistance, and less for financial help.