Bank Pulls Plug on Open-cast Gold Mine

The World Bank president, James Wolfensohn, has personally intervened to stop a $100m (£64m) loan for what would be Europe's largest open-cast gold mine.

There are fears that the $400m Rosia Montana project in Romania would destroy the country's oldest village, displace 2,000 people and create 196m tonnes of cyanide-laced waste.

Mr Wolfensohn yesterday directed the bank's private lending arm, the International Finance Corporation, to drop all negotiations with Gabriel Resources, the Canadian company planning the scheme. It is believed he was influenced by Romanian environmentalists.

Gabriel Resources, supported by the Romanian government, estimates that the mine could employ 250 people and extract 10m ounces of gold over 15 years. The company's president, Robin Hickson, said that it intended to proceed without IFC support.

The company had approached the World Bank mainly to get environmental and social assistance, he said.

Other international banks are now expected to come under pressure from a coalition of environmental groups, including Greenpeace and Friends of the Earth, which claimed that the valley would be transformed into a series of open-pit mines and that the neighbouring valley would become a cyanide storage tank.

The project has been criticised by 83 Romanian economics professors as well as by international archaeologists who fear that the area's unique Roman mine and other ancient treasures would be destroyed.

Others fear a repeat of the disastrous pollution at the nearby Baia Mare gold mine, where a cyanide spill in 2000 polluted the Tisza and Danube rivers, contaminating the drinking water supplies of 2.5 million people and killing 1,200 tonnes of fish

"We are overjoyed," said Eugen David, the president of a local community group. "We hope that other financial institutions and banks will follow suit and refrain from investing in this speculative, unprofitable and unsustainable project that will only increase pollution and poverty."