Romania fails to reach agreement with Cupru Min buyer, plans to re-start privatization process

Romanian authorities did not reach an agreement with Roman Copper, the company that had won the bid over the country's copper min company Cupru Min. The Canadian company rejected the conditions about the full payment of the contract – some EUR 200 million, according to the bid, as well as those related to environment investments and the contract transparency clause, according to the country's Economy Ministry. Negotiations between the state and the winning companies were heated, according o media reports, and started on Friday early in the morning (April 6), the day when the privatization contract was supposed to be already signed. The Ministry’s statement came at the end of the day on Saturday (April 7 ).

Prior to the Ministry's statement, Bayfront Capital Partners, which controls buyer Roman Copper, had publicly announced it reached a verbal agreement with the Romanian authorities and was expecting this agreement to be enforced. The company was then saying it had accepted all the terms required by the Government, even if they were not included in the privatization package from the beginning.

The state will re-start the privatization process for Cupru Min in the following period. “The Romanian state needs serious, strong partners, with good faith in privatizations,” according to the Economy Ministry statement. The Ministry had asked the buyer to take over all environment obligations and water management for Cupru Min, and the buyer should have paid EUR 32.2 million in investments on these areas. The final amount for environment investments could have been higher, the buyer was also announced. The transparency clause meant the contract should have been made public, which had been demanded by the civil society in Romania. Romania wanted Roman Copper to pay the EUR 200.7 million amount within 30 days from the OK given by the Competition Council and from receiving the integrated environment authorization. The Canadian company Roman Copper Corp, owned by Bayfront Capital Partners, won the bid for copper mine Cupru Min Abrud in Romania, in a deal worth some EUR 200 million. Three other companies signed up for the bid: Australian OZ Minerals, Bulgarian Ellatzite-Med AD and Dundee Holding from the Netherlands. The Bulgarian firm was disqualified just before the start of the bid. The starting price in the bid on March 26 was EUR 57.3 million. Cupru Min Abrud has estimated reserves of 900,000 tonnes of copper at Rosia Poieni. However, only a small amount of of it can be extracted every year. The investor needs to pay a royalty on copper extracted, of 4 to 6 percent, to the Romanian state. Romania’s Cupru Min ended 2011 with EUR 37.9 million in sales, 41 percent above the 2010 level, and a single functional production line of the existing four.