MAC: Mines and Communities

Dundee Precious Metals threatens to pull out of Bulgaria - or not

Published by MAC on 2006-04-19

Dundee Precious Metals threatens to pull out of Bulgaria - or not

19th April 2006

The Canadian company Dundee Precious Metals plans to invest five million dollars in gold deposit research on the territory of Bulgaria.

This investment is listed in the annual report of the company, Dnevnik newspaper reported.

Dundee Precious Metals is carrying out research in the central and eastern Rhodoppe region at the moment. The budget for research there totals four million dollars.

According to the project, the company would search for mineral resources, which Dundee plans to extract in case it wins the state concession. The company also researches in the Chelopech region, where significant gold deposits exist, according to experts.

The project, however, has been halted. Last week Water and Environment Minister Djevdet Chakurov postponed the signing of the Chelopech Mining project. Chakurov said he would like to get the opinion of Economy Minister Roumen Ovcharov, before the project is launched.

Chelopech Mining involves expansion of the gold extraction in the region. The quantity would likely reach three million tons annually. Project investment totals $ 150 million, the company already provided $ 50 million.

Gold extraction company could pull out of Bulgaria

3rd April 2006

Canada's Dundee Precious Metals said on March 23 it would pull out of Bulgaria if their gold extraction project in Chelopech is not allowed to expand.

The Chelopech copper and gold mine in western Bulgaria will be closed if the Environment and Water Affairs Ministry delays any further the project for the upgrading of the mining facilities, Dundee Precious Metals president Jonathan Goodman told the media.

The Supreme Expert Environmental Council (SEEC) with the Ministry of Environment and Water Affairs approved on March 10 the positive environmental impact assessment of a Dundee project to dig for more gold in the area.

Dundee, through its Bulgarian subsidiary Chelopech Mining, operates the Chelopech gold and copper mine.

Environment and Water Affairs Minister Djevdet Chakurov ordered a revision of the assessment. Chakurov's decision was explained with the fact that his deputy, Chavdar Georgiev, had expressed reservation about the project because of environmentalists' protests.

The latter fear that the mine, which, according to them, is a source of serious and deadly poisonous cyanide pollution, will become even more dangerous after the expansion.

However, according to environmental authorities, all measures have been taken to prevent and reduce the harmful impact of the project on the people and environment in the local villages - Chavdar, Chelopech, Karlievo and Tsurkvishte.

The measures include a green belt around the production site and the facilities and roads to be used by trucks, as well as the establishment of a modern automated system monitoring the quality of the air.

Representatives of the coalition Cyanide-free Bulgaria protest against the investment proposal. They threaten to start a series of legal actions against Dundee not only in Bulgarian court but also before the European Court of Human Rights.

The hesitation by environmental authorities has put Dundee's Bulgarian subsidiary in a deadlock that it does not want to endure any longer.

"If we do not receive a permit by the end of the month (March), we will not be able to build the necessary facilities by the end of 2007, when our contracts with processing enterprises expire," Dundee's vice president, Laurence Marsland, said.

Then, the Canadian company would have to look for another country in which to build the new technology. However, that will delay them and mining will have to be suspended until new facilities are built.

The worst option possible for the Chelopech mine is closure, which would entail the layoff of 750 workers.

The expansion project for Chelopech has a planned investment totalling $150 million (126 million euro), 89 million of which is designed for investment over the first three years of the project's implementation. The expected increase in production is three million tons in 15 years, the current output coming to about 850,000 tons.

Chelopech Mining also undertakes to create 700 new jobs and develop social programmes for the population centres near the Chelopech mine.

The delay of the permit is yet another example of the problems caused by the environmental legislation to investors in Bulgaria, the chairman of the American Chamber of Commerce in Bulgaria, Kenneth Lefkowitz, said, quoted by Bulgarian-language media.

In his view, this is an area where no progress has been made and investors continue to be discouraged.

In another development on March 27, the SEEC issued a second positive assessment of Dundee's expansion project. Chakurov has two weeks to decide whether to support this decision of the council under his authority.

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