1,000 families lose their source of income following activity reduction at Roșia Montană Gold Corporation
Starting April 2014, about 1,000 families lose a major source of income, following the reduction of company’s activity leading to collective lay-offs of the majority of employees and suspension of all social and investment programs in the area;
RMGC is forced to take this measure due to objective reasons – the unjustifiably long delays in the permitting procedures of the Rosia Montana mining project and considering the uncertainty surrounding the conclusion of these procedures have made restructuring unavoidable;
Despite the fact that the company is constrained to lay off 80% of its workforce, RMGC remains willing to invest significant financial resources to build the first modern gold mine in Romania. Company hopes this restructuring proces to be a temporary measure, until the government approves the mining project, which will allow RMGC to hire thousands of people.
Bucharest/ Rosia Montana, 31 March 2014 – Due to unjustifiably long delays in the evaluation and permitting of the Rosia Montana project despite company efforts, mining company Rosia Montana Gold Corporation (RMGC) is forced to greatly restrain its activity, resulting in job losses for about 80% of company workforce. The company will submit the restructuring plan to the Alba County Employment Inspectorate and will apply a collective redundancy programme, making every possible effort to mitigate the social impact of this measure.
In total, about 1,000 families will be affected by the activity reduction, as follows:
- 367 of the 481 employees of RMGC will lose their jobs as of April, 2014;
- More than 100 jobs in social programs financed by RMGC will be lost due to the reduction of activity;
- It is estimated that over 300 jobs at the companies providing goods and services (building materials, transportation, car repairs, food, stationery, IT equipment, architectural and engineering services, etc.) in Rosia Montana, in the Apuseni Mountains and Alba county will be lost;
- 283 beneficiaries of the social program that RMGC conducted in Rosia Montana and in the area lost their support.
"Unfortunately, instead of employing thousands of people as we were preparing to start building the mine, we now have to make 80% of our employees redundant in an area where unemployment is very high and where there are no viable alternatives. It is a very serious situation that we are in a position to cut the income for 1,000 families in the area - people who are miners from father to son, and who have no other options. We have designed a state-of-the-art mine that strictly observes Romanian and European Union legislation, we are keeping our equipment waiting in the warehouse and we are ready to implement the mining project in Rosia Montana. We remain convinced that Romania should decide to approve the mining project in Rosia Montana, and in that case the company will be able to re-establish its workforce, and more, will employ thousands of people, to build and operate this modern mine," said Dragos Tanase, RMGC Managing Director.
RMGC holds a valid mining license for the gold and silver deposit in Rosia Montana. RMGC will maintain, at a reduced level, the activities that allow the preservation of the mining license and the continuation of permitting procedures, plus a minimum of administrative and support activities. It will reduce to a minimum level the number of employees involved in other activities currently stopped or greatly restricted - such as construction, restoration of heritage, research and restoration of mining galleries, restoring of the houses in the historical centre, activities of relocation, communication, etc. Thus:
- Works of rehabilitation of the Catalina-Monulesti mining gallery will be suspended;
- Works of design and rehabilitation of the Historical Centre of Rosia Montana will be suspended;
- Preparation of the accommodation facilities for tourists (hotel "Old City Hall" and the guesthouse in the Old School) will be suspended;
- All social and community assistance programmes will be suspended.
With the mining investment blocked and in the obvious absence of other large investments, the future of Rosia Montana is compromised, and people are likely to see how the area crumbles before their eyes, although most of them have argued on many occasions, including at the local referendum held in December 2012, that they want the two thousand year-old mining tradition to go further. Social effects will persist on a long term, by the ongoing depopulation of the area, as young people will be forced to leave in search of jobs. Moreover, an area undergoing degradation and depopulation has reduced chances to attract other investors, especially since the history of the mining project does not set an encouraging precedent for other companies looking for future business destinations.
Beyond social effects, discontinuation of investment programs and activity reduction at the mining company will lead to irreversible degradation of cultural heritage, loss of all the progress made so far in its research and restoration. It will also result in the aggravation of the existing environmental problems.
Throughout 2013, the Rosia Montana Project has been evaluated by an inter-ministerial commission, a special parliamentary committee and by all members of the Romanian Parliament, with no final answer on the authorization of the investment.
Based on a gold price of 1,200 USD/ounce, Rosia Montana mining project can directly bring over 5 billion USD to the Romanian economy, out of which 2.3 billion USD as state revenues from taxes and 2.9 billion USD as revenues of Romanian suppliers and employees. In total the project would bring 24 billion USD in direct and indirect benefits and would be one of the largest foreign investments in Romania. In addition, RMGC will provide an environmental guarantee of 146 million USD and substantial investments for cultural patrimony. The Rosia Montana mine can generate thousands of jobs, complying with the Romanian and European Union environmental legislation and applying the best available technologies available.