Regional development, mining and tourism. Case study from Rosia Montana

Importance of regional development

The Regional Policy promoted at a European level is an investment tool supporting social and economic growth as well as better integration through job creation, greater competitiveness, and an improved quality of life for long-term sustainable development. ‚ā¨347 billion has already been allocated by the EU for investment in local development in Europe's regions for the period 2007-2013 (INFOREGIO - European Commission, 2007).

One of the core principles of an efficient sustainable regional development is the promotion of joint venture projects aimed at increasing the efficiency of regional development programmes and identifying new opportunities for public-private partnerships. The inclusion of economic and social partners, local stakeholders and non-governmental actors at European, regional and local levels are the links strengthening these networks.

The current economic crisis affecting Europe has had a strong influence on the implementation of regional development programmes. Successful regional development depends upon efficient infrastructure with critical mass, the existence of usable, up to date facilities, social services, environmental rehabilitation and a long-term plan for their sustainability.

A role for Mining in promoting Europe’s regional development

‚ÄěRegional Development Planning¬†is an approach to making long-term plans for a country‚Äôs regional development, which links feasible private sector initiatives in support of coherent and integrated, productive and social infrastructure to enable economic diversification of the region. [...] Mining can create significant economic benefits--the direct benefits that come in the form of income and employment as well as the indirect benefits stimulating local economic activity.‚ÄĚ (Oxford Policy Management Institute, International Council of Mining and Metals)

Europe is rich in raw materials and exploiting them can only have a positive impact on competitiveness. With about 30 million EU jobs depending on the availability of raw materials. The development of EU's high tech manufacturing industry including eco-technologies is at stake given the increased dependency of Europe on accessing raw materials outside of its borders. (DG Enterprise and Industry - European Commission, 2012)

According to the approach developed by the UK based Oxford Policy Management Institute and the International Council of Mining and Metals (ICMM), undertaking structural change in mining regions can be difficult for small or medium-sized communities, particularly those in peripheral regions. In cases such as these, there is a strong need for partnerships aimed at exploiting mineral wealth in order to ensure sustainable socio-economic development. Implementation of National and European policies in this field combined with the latest available mining technology as well as mineral partnership ventures might also have a very strong beneficial positive impact on regional development.

Currently, the European mining industry represents one of the most modern and most innovative industrial sectors within the European Union. Most sustainable techniques used for exploration and extraction in Europe are supported by environmental protection and safety measures which are amongst the most stringent worldwide.

Conversely, a lot of administrative and political policies can constitute obstacles to exploiting mineral wealth. Kate Ascher, executive vice president of the New York City Economic Development Corporation and expert in urban planning and public-private partnerships, recommends that local jurisdictions should rely more on the private development of mineral resources, as private companies usually are more open to public scrutiny than government agencies. Of course all projects should fully comply with European and national legislation currently in force. Other recommendations made by Ascher in her works published between 1999 and 2007 were for public authorities to simplify and clarify methodologies for policy implementation and for societies to rely on extra-governmental entities to serve as ombudsmen for the management of natural resources. (Ascher, 1999)

The role of tourism in Europe’s regional development

Tourism can also play a key role in the development of regional economies. Tourism is another key sector of the European economy generating more than 5% of EU GDP, with about 1,8 million enterprises employing around 5,2% of the total labour force (approximately 9,7 million jobs). When related sectors are taken into account, the estimated contribution of tourism to GDP growth is much higher: tourism indirectly generates more than 10% of the European Union's GDP and provides about 12% of the labour force. (DG Enterprise and Industry - European Commission, 2012)

When initial visitor spending in the local economy is taken into account, such as provided by suppliers to tourism, this can lead to a much larger beneficial drip-down effect into the wider economy. Conversely, tourism alone is not sufficient for this purpose but requires a viable and sustained community particularly in remote locations that have less of a concentration of surrounding population from which to draw on.  

Consequently, sustainable development - and hence tourism - requires more than just tourism alone. It needs to be built on strong pillars such as industrial spin-offs, business development methods and programmes, diversification, cooperation with local authorities and an increased consumer demand.

Mining and Tourism: A case study from Romania

For Romanian regional development policy, the effects of regional disparities across the country remain among the most pressing issues. There is a clear ¬†‚Äěcentre to periphery type‚ÄĚ approach creating a structure delivering faster growth for those regions immediately surrounding the capital, driven by investment that prefers developed areas, labour migration and government intervention in its more developed regions in order to achieve a higher national growth rate.

Regions within Romania suffering with poor economic development are continuously searching for new opportunities for growth aimed at reducing as much as possible the gap between themselves and other more developed ones.

One such example is Rosia Montana, where there has been mining activity for two millennia. There is a compelling case where mining and tourism could become joint instruments towards a vastly improved regional development...

Currently, the lack of alternative sustainable economic activity in the area has left Rosia Montana decaying and heavily polluted from previous unregulated mining activity. It suffers a legacy of severe environmental damage, including hazardous, abandoned open pits and severely polluted rivers. Moreover, the Romanian authorities have classified Rosia Montana as a ‚ÄėDisadvantaged Zone‚Äô due to high levels of unemployment, currently estimated to be around 80% locally along with very low income levels.

The local heritage, which is of great cultural importance, continues to deteriorate rapidly resulting in potential permanent loss if nothing is done to preserve and restore it. Tourism around Rosia Montana is currently at a very low level with a high proportion of visitors staying only for the day or with friends and relatives, thus contributing only minimal benefit to the local economy.

The modern mine proposed by Gabriel Resources in Rosia Montana through its Romanian subsidiary, Rosia Montana Gold Corporation (‚ÄúRMGC‚ÄĚ), could remedy the heritage and environmental issues and also become a tourist attraction during its operation as the largest operation of its type in the EU, potentially one of the largest world-wide. RMGC plans to start developments in tourism during the lifespan of mining activities, from restoration and refurbishment of Roman galleries and other heritage monuments, to cleansing the water course in and around the mine. Once mining operations cease, long-term opportunities created by the rehabilitated landscape shall be put for tourist use. . In summary, mining will create directly and indirectly, large-scale business spin offs ensuring the viability of services and facilities needed for tourism. Contemporary mining could therefore become a visitor attraction and act as a key attraction for educational visits (university students studying mining, economics, planning, etc).

Commitment to Rosia Montana has occurred prior to mining. RMGC has already invested approximately US$15 million on extensive independent research on a range of heritage aspects around Rosia Montana - its archaeological sites and other ancient vestiges, the urban environment, the landscape and its cultural traditions. The Company has also funded planning and protective works for the preservation and restoration of surface and underground vestiges of ancient Roman mining to modern times, and to buildings situated in the historic area of the community and the surrounding landscape.  The latest project has been the refurbishment of a derelict town hall into a new hotel in the community.

Another US$70 million or more has been ear-marked for preserving and ensuring the survival and safe access to this patrimonial heritage in the immediate area; a further contribution of US$70 million to heritage projects elsewhere in the country is also foreseen.

Whilst the area has much heritage potential, its key attractions are in such a dilapidated condition and in some cases inaccessible, that only immediate remedial action will ensure its survival for present and future generations to enjoy. Doing nothing is not an option.

As other mining projects which have already been implemented demonstrate (i.e. Eisenerz‚Äď Austria and Kittil√§ ‚Äď Finland), mining and tourism development are not mutually exclusive but go hand in hand in ensuring long-term sustainable development opportunities not only at national but also local level. The restoration of cultural heritage and the development of a service sector can thus act in support of entrepreneurial growth through a programme of sustainable development.

Jonathan Henry, Gabriel Resources

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Bibliography

Ascher, K. (1999). Why Governments Waste Natural Resources: Policy Failures in Developing Countries. Baltimore: The Johns Hopkins University Press.

DG Enterprise and Industry - European Commission. (2012, 02 29). Commission Staff Working Paper. Retrieved 09 19, 2012, from Making Raw Materials available for Europe's future well-being - proposal for a European Innovation Partnership on Raw materials: http://ec.europa.eu/enterprise/policies/raw-materials/files/docs/staff_w...

DG Enterprise and Industry - European Commission. (2012, 05 07). Supporting European Toursim. Retrieved 09 19, 2012, from Entreprise and Industry: http://ec.europa.eu/enterprise/sectors/tourism/index_en.htm

INFOREGIO - European Commission. (2007).¬†EU cohesion funding ‚Äď key statistics. Retrieved 09 17, 2012, from Regional Policy - INFOREGIO: http://ec.europa.eu/regional_policy/thefunds/funding/index_en.cfm

Oxford Policy Management Institute, International Council of Mining and Metals. (n.d.). Regional Development Planning. Retrieved 09 19, 2012, from MINING: PARTNERSHIPS FOR DEVELOPMENT: http://www.opml.co.uk/sites/opml/files/Mining%20Partnerships%20for%20Dev...