The Age
Cyanide spill sparks disaster

By SIMON MANN and BARRY FitzGERALD

Thursday 10 February 2000


The Hungarian Government was considering legal action against an Australian mining company over a lethal cyanide spill that has infected rivers and poisoned the drinking water of more than two million people.

The Hungarian Government was considering legal action against an Australian mining company over a lethal cyanide spill that has infected rivers and poisoned the drinking water of more than two million people.

The company, the Perth-based Esmeralda Exploration, is facing financial ruin after the spill at its gold mine at Baia Mare, in Romania, triggered an environmental disaster in eastern Hungary.

Esmeralda said last night the operation would remain shut down pending a review by Romanian authorities.

Esmeralda shares were suspended from trading before last night's statement, but not before some sales were recorded at 20 cents a share, representing a 38 per cent price fall.

Hungarian environment protection agencies and water authorities estimate that thousands of birds and tonnes of fish were poisoned when 100,000 cubic metres of contaminated water flowed into the Szamos and Somes streams, tributaries of the Tisza, Hungary's second biggest river after the Danube. Cyanide levels had been recorded at more than 700 times "normal" amounts, according to Hungarian water authorities.

Yesterday, nine days after the accident, cyanide concentration in a reservoir supplying the city of Szolnok, 80 kilometres south-east of Budapest, was still 28 times higher than the acceptable 0.1mg/litre.

The city's 120,000 residents have been told not to drink tap water, while hospitals and schools have been receiving regular visits from fresh-water tankers. Some light industry has been forced to shut down and the Government has banned fishing in the region, especially in the worst-hit Szabolcs County. People have been warned not to pick up dead fish or other wildlife.

The Baia Mare gold tailings project, 50 per cent-owned by Esmeralda Exploration, is being blamed for most of the pollution. The mine, believed to contain substantial gold and silver deposits, started operating a year ago in partnership with the Romanian state-owned mining company, Remin. It managed its first gold "pour" last April and is expected ultimately to produce 50,000 ounces of gold and 250,000 ounces of silver annually.

Esmeralda confirmed that Romanian authorities had classified the spill as a "serious accident" and that emergency response crews had stopped the overflow by 1.30am on 2 February.

It said the overflow from the tailings dam was caused by a build-up of water in the dam after heavy rain and melting snow.

The company did not estimate the amount of overflow, but confirmed that it had entered Hungary. "It is important to stress that the incident was an overflow and not a structural failure or leak," it said.

The company did not say why the closure of the mine had not been reported earlier to the Australian Stock Exchange. The exchange requires information of a material nature to be announced to the market.

The statement was the group's first response to news of the spill which was broken by the Sydney-based Mineral Policy Institute, an independent group that monitors the environmental performance of the mining industry.

A second, smaller cyanide spill into the Somes River, allegedly from a coal mine in northern Romania last Sunday, has worsened the disaster and spread the contamination into neighboring Ukraine.

Officials there have warned people in the border town of Chop not to take water from nearby streams.

Serbia was also bracing itself for a possible flow-on effect.

The Tisza River joins the Danube just above Belgrade. Water authorities there, however, say they expect the cyanide will be sufficiently diluted over the course of its 650-kilometre journey.

The spill from the Baia Mare apparently occurred on 31 January when a protective wall of a dam at the plant was damaged in extremely heavy snowfalls.

Despite the freak nature of the accident, there was increasing anger that the disaster had involved foreign corporations.

Resources experts were critical of the operators for using a cyanide solution to dilute ore, a technique that has been banned in the European Union.

Hungary's Deputy State Secretary, Mr Gabor Bagi, described the spills as "extremely serious" and said Hungary was taking "all possible diplomatic and legal steps" to win compensation.

An approach to the International Court in The Hague was being considered.

Budapest also stepped up the pressure on its neighbor, calling in Romania's ambassador, Mr Petru Cordos, to impress upon him its demand for compensation.

A foreign ministry official, Mr Gabor Horvath, said Hungary expected Romania to cooperate fully, especially since it was promoting itself for membership of the EU which took environmental issues seriously.

"This is the first most serious environment catastrophe in the 21st century and we will use international public law as well as international private law to seek and claim restitution for whatever damage has been done to my beautiful country," he said.

However, Romanian media reported that Bucharest was refusing to confirm the second spill.

A report on Hungarian radio also claimed the the Baia Mare operation had been fined a mere $US860 and was being allowed to continue operating.

The head of the Hungarian Parliament's Environmental Protection Committee, Mr Zoltan Illes, said he would campaign to win justice from the mine's co-owners.

"The profit was produced here but used elsewhere," he said.

"The contamination is being left here. Nature is being destroyed here in central Europe and the health of thousands is being endangered while in the meantime these technologies are perhaps not permitted in their own country, in Australia, or in Western Europe."

He added that he had pushed Hungary's green organisations to campaign vigorously on the issue "to inform Australian public opinion so that the Australians do not leave this catastrophic situation as it is".

Local scientists said the full impact of the pollution on the local environment could not be assessed for some time.

However, academics were suggesting that some unique species of birds and insects could become extinct because of the poisoning.