Romania gold project at Rosia Montana back on track Published duration 28 August 2013

image copyright AFP image caption Rosia Montana lies on top of one of Europe's largest gold deposits

A Canadian mining firm has welcomed a new Romanian government push to let it develop a controversial gold mine.

The Rosia Montana Project in Transylvania, northern Romania, has been held up for more than a decade by a row over its environmental impact.

An open-cast gold mine was established in the communist era, but now Canada's Gabriel Resources Ltd wants to expand and modernise the site.

The mine would cut into mountain peaks and involve heavy use of toxic cyanide.

A statement from Gabriel Resources, sent to the BBC, praised new draft legislation on the Rosia Montana Project, approved by the Romanian government on Tuesday.

The Romanian parliament will consider the bill next month.

"If adopted by the Romanian parliament... this legislation will set the framework to significantly accelerate the development of Europe's largest gold mine at Rosia Montana and other mining projects in Romania," Gabriel Resources said.

The company's CEO Jonathan Henry said the government's move "represents a significant milestone for all stakeholders".

"We are extremely encouraged by this major step towards progression of the permitting process and consider it to be a clear sign of endorsement by the government for investment into Romania."

Revenue for state

The company controls Rosia Montana Gold Corporation (RMGC), which would develop the mine. But the Romanian state's stake in the project would rise to 25% from a current 20%.

The royalty rate for the Romanian state would also rise from the current 4% to 6%.

Gabriel Resources says RMGC would "undertake to preserve cultural heritage, ensure environmental protection and eliminate historical pollution".

The company says the project "will create an average of 2,300 jobs in the construction phase and 900 in the operational phase".

A local opposition group - the Rosia Montana Cultural Foundation - has support from some international non-governmental organisations and other activists, who have so far stalled the project on environmental grounds.

They fear that the mine expansion would ruin a picturesque area and wreck ancient Roman mining galleries.