Romania backs out of mine sale, privatization hits snag

Sat Apr 7, 2012 11:28am EDT
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By Radu Marinas

BUCHAREST (Reuters) - Romania has backed out of a deal to sell its biggest copper mine to Canada's Roman Copper Corp, its economy minister said on Saturday, a fresh blow to a privatization plan agreed with the International Monetary Fund.

Former communist countries across the European Union have sold state holdings, but Romania's persistent failure to do so has left a huge, inefficient public sector in the bloc's second-poorest nation as it struggles to emerge from deep recession.

Roman Copper won a tender to buy the Cupru Min Abrud mine for 200.8 million euros ($262.31 million) last month, outbidding Australia's OZ Minerals Ltd OZL.AX, Dutch Dundee Holding and Bulgaria's Ellatzite Med Ad.

But Economy Minister Lucian Bode said the two sides, after 10 days of talks, could not agree on the terms of the deal, part of a privatization plan agreed with international lenders and designed to raise nearly $2 billion this year.

"The state did not want to give up three conditions," Bode was quoted as saying by state news agency Agerpres. "We will relaunch the tender but we will keep the same conditions."

Under those conditions, all privatization contracts had to be made public, payment had to be settled within 30 days and the company had to set up a collateral deposit of 32.27 million euros as a guarantee for future environment investment, Bode said.

"We were surprised that the negotiating committee refused to accept our written signature," said Mike Curtis, partner at Bay Front Capital Partners, the Toronto-based merchant bank that owns Roman Copper.

Failure to sell Cupru Min - with estimated reserves of 900,000 metric tonnes of copper, or about 60 percent of the country's overall estimated reserves - does not bode well for the plan to cut state participation in its enterprises.   Continued...