Monday, November 20, 2006

Globe and Mail: Fighting fire with fire in Romania

Fighting fire with fire in Romania

When Gabriel Resources CEO Alan Hill found his company's $638-million (U.S.) Romanian mining project under siege by an aggressive environmental group, he launched an attack of his own, with a $1-million trilogy of TV commercials and a Michael Moore-style documentary touting the benefits of the development
From Monday's Globe and Mail

A fury over a proposed Canadian gold mine has raged in Romania's government chambers and in those of neighbouring Hungary. It has played out on television commercials, in movie theatres, on the Internet and in advertising in British newspapers. It has even reached the office of Foreign Affairs Minister Peter MacKay.

Fuelled by an irreverent documentary, entitled Mine Your Own Business, the controversy bears all the hallmarks of an assault on the big, bad mining industry by huggable non-governmental organizations. In this case, however, the clever, well-funded media campaign is an assault on NGOs by a small Canadian miner, Gabriel Resources Inc. of Toronto.
"You've got to fight fire with fire," Gabriel CEO Alan Hill says of the campaign. "Nobody has ever pushed back on the NGOs like this."

The Michael Moore-style, pro-mining development documentary is part of an expensive and unorthodox series of public relations moves mounted by Gabriel to dispute negative claims about its plans to dig for gold in Transylvania. The company has launched broadsides against celebrated environmentalists, such as Vanessa Redgrave, carried out a very public character attack on one of its main opponents in Europe and flooded Romanian TV with video clips about how much good the project will bring.

For almost a decade, Gabriel has tried to get the necessary permits and government clearance to build its Rosia Montana project in the Apuseni Mountains of west-central Romania. Those efforts have been stymied by the work of NGOs and anti-mining protesters to successfully rally opposition to the proposed $638-million (U.S.) mine.
When a fresh management team took over Gabriel 18 months ago, it knew it had to fight back to save the Rosia Montana project. But Mr. Hill -- a long-time executive at Barrick Gold and other mining firms -- opted to take the fight back to the environmentalists.

On his hit list was one NGO in particular. Alburnus Maior has been Gabriel's sharpest critic, going so far as to tell Romanians the company's founder was once convicted of heroin possession. More importantly, it has raised alarm bells about possible environmental damage caused by the mine to the Transylvanian community. And it recruited Ms. Redgrave, a film star and political activist in Britain, to its campaign, convincing her to buy a piece of land in the village where Gabriel will have to relocate residents if its mine goes ahead.
Fighting back, Gabriel hired an advertising firm to make television commercials, which have run on Romanian national television during the evening news and episodes of CSI: Crime Scene Investigation.
The mining firm also retained communications specialists, including a former White House staffer under George Bush Sr., and took out full-page ads in a British newspaper to discredit Ms. Redgrave. Finally, Gabriel hired a pair of freelance journalists and put up 80 per cent of the €240,000 ($353,000) budget to make Mine Your Own Business -- even agreeing to cede creative control, at the filmmakers' request.

(In addition to the documentary, Gabriel is now producing another mining film starring Romanian television personality Don Chisu.) The public relations campaign will consume about 12 per cent of Gabriel's $30-million capital expenditure budget this year -- a reasonable price tag, Mr. Hill contends, to counter the "exaggerations, extrapolations and flat-out lies" spread by Alburnus Maior.
"It's a lot of shareholder money," he concedes. "But it's got to do a job."
The company approached the husband-and-wife team of Phelim McAleer and Ann McElhinney, a pair of Irish freelance journalists living in Eastern Europe. Mr. McAleer had covered the Rosia Montana controversy for the Financial Times, while Ms. McElhinney had produced several documentaries including Return to Sender, a film about corrupt foreign adoption services that ran on the CBC.

At the film's centre is Rosia Montana resident George Lucian, a young man who wants Gabriel's mine developed so he can get a job. Mr. Lucian travels with the filmmakers to other mining communities, including Madagascar, to expose what the film calls "the dark side of the environmental movement."
The movie is packed with clips of residents saying they want Gabriel's mine to be built and improve the community's fortunes.

In contrast, Alburnus Maior's extensive website presents a slew of allegations against the Rosia Montana development. Its cause has been widely covered by the local press. A few years ago, a Hungarian filmmaker made a documentary called The New Eldorado, which raised disturbing allegations about the project.

Now, Gabriel is using the same mediums to present a different message.
The company recently mailed copies of Mine Your Own Business to other mining executives, industry analysts and its largest shareholders. Gabriel hopes to win support for its cause from colleagues sympathetic to its struggles.
"There must be a lot of people in similar boats," Mr. Hill says, adding "we'd like to see it as a centrepiece for viewing NGOs."

Quarterbacking Gabriel's communications strategy is consultant Dan McGroarty, a former deputy director of White House speech writing and special assistant to President George Bush Sr. Based in Washington, D.C., Mr. McGroarty says he hopes to counter what he calls "a mountain of misinformation" spread about Rosia Montana amid frequent upheaval at Gabriel's head office in Toronto.
"They've been fed so many falsehoods over time. The management of Gabriel came and went and the story line was largely shaped by the opposition groups to the mining project and we needed to change that in a way that touched mass perception," he says.
One of his first moves was to engage a local communications company to produce a trilogy of television commercials for Gabriel -- at a cost of more than $1-million -- aimed at winning over the citizens of Romania.

"[The politicians] need cover," explains Gabriel's chief financial officer Richard Young. "That's why you need this broad-based communications program, so when they approve this project the people on average will say, 'That's OK,' and not want to run them out of town."
The first spot, turned the words of Alburnus Maior's Stephanie Roth, a former journalist turned activist, against her. Ms. Roth's descriptions of a tranquil and sylvan agricultural community in Rosia Montana were juxtaposed with stark images of impoverished conditions and environmental damage caused by the state-run mine that Gabriel says it wants to transform into a modern facility with vastly improved standards.

For her part, the Swiss-born Ms. Roth thinks the commercials, along with the rest of the communications efforts by Gabriel, have backfired. "It works in our interest. It has had the opposite effect of what they are trying to achieve," she says in an interview.
The commercials have fallen on deaf ears, she adds, and are being interpreted by the citizens of Romania as propaganda, a tactic they are all too familiar with, having lived under the regime of communist dictator Nicolae Ceausescu.

"You would think these commercials are for a child-friendly shampoo," she says. "They don't know jack-shit. . . . I'm glad they are investing all that money."
Gabriel's campaign has also stirred debate outside Romania. Recently, the company sent a copy of the documentary to Don Ferris, the CEO of Calgary's Mawer Investment Management Ltd. Gabriel says Mawer was on a list of Gabriel's 40 largest shareholders updated in August. Mr. Ferris says his investment firm doesn't hold any Gabriel shares, and if it ever did it would have been indirectly through institutional clients. Mr. Ferris took the DVD home and gave it to his wife, Jeanne Keith-Ferris, an active charity volunteer and environmentalist who watched the movie.
"It made me so mad," Ms. Keith-Ferris says in an interview. "It's a classic case of a business attacking groups that oppose them. Their philosophy is to muscle people out of the way."
Last week, she wrote a letter to Foreign Affairs Minister Peter MacKay asking that Canada "put in place strict rules to insure that companies like Gabriel Resources and others, do not conduct irresponsible mining practices in impoverished countries."

Gabriel is no closer to getting the permits needed to begin building the mine. The company had expected to win a crucial permit by the end of the year, but is now targeting early 2007. It still hopes to initiate construction in the spring of next year and begin mining gold two years later.


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