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March 30, 2023

Cupru Min – full stop and begin anew

Negotiations with Roman Copper are irrevocably over, the Economy Minister announced. The privatisation process has to restart, analysts claim.

Negotiations with Roman Copper are irrevocably over, since the Canadian company rejected the conditions concerning the full payment of the contract and the environment and transparency clauses, the Economy Ministry announced at the end of last week. “The Economy, Commerce and Business Environment Ministry (MECMA) will make sure that Cupru Min’s activity will continue in optimal conditions, company representatives starting the overtures needed in order to urgently obtain the integrated environment permit,” the Ministry’s communiqué added. In the following period the Ministry will resume the privatisation process, in line with the commitments taken before the IMF. “The Romanian state needs serious, potent and good faith partners in privatization processes,” the institution underlined. Prime Minister Mihai Razvan Ungureanu met yesterday for an hour Minister of Economy, Lucian Bode at Victoria Palace. A subject was most likely Cupru Min privatisation, HotNews.ro informs.MECMA also announced the contractual terms it demanded. Thus, Roman Copper had to cover all environment obligations. Thus, Roman Copper had to invest EUR 32.2 M in environment protection and water management. At the same time, the buyer was notified that the total cost of environment obligations could be higher. The transparency terms would have allowed the state to make the contract public. At the same time, MECMA wanted the full package of Cupru Min shares whose value stood at EUR 200.7 M to be paid in 30 days’ time after the Competition Council gave its green light and the company received its environment permit. Bayfront Capital Partners, which controls Roman Copper, announced on Saturday through a communiqué that on Friday it reached “a final verbal agreement” with Romanian authorities and expects the agreement to be implemented. The agreement includes the government’s terms that Roman Copper accepted even though they were not initially included in the contract presented within the privatization package, Bayfront pointed out. Roman Copper has accepted all the terms and considers that the said contract is valid, in force and binding, the communiqué added.  The way in which Cupru Min was evaluated sparked a veritable media row – only the company’s assets were taken into account, the copper deposits worth EUR 13-14 bln being disregarded. According to economist Liviu Voinea, founder of the Applied Economics Group, the terms should have been clearly spelled out in the tender book, adevarul.ro informs. The privatisation process has to be resumed and this time will turn out to be more arduous. First of all, because Cupru Min’s integrated environment permit expired on December 31, 2011. “How can you, as a state, illegally sell an expired product? The authorization has to be re-obtained before selling, and that takes time,” investments consultant Ionel Blanculescu stated, adding that in his opinion the process will last at least a year. In his turn, Voinea claims that the privatisation can be resumed in the absence of an environment permit but that will significantly impact the price that is far too small as it is. “The first aspect that has to be re-addressed is the letter of warranty that will also act as eliminatory criteria,” Blanculescu added. The tender book cannot be modified, considering that the privatisation strategy is working under the green light of the European Commission, Silviu Manastire, Economy Minister Lucian Bode’s adviser, pointed out. Voinea claims that privatisation is not the best solution for Cupru Min. Instead, a production commitment has to be reached with a company. Thus, the state would receive a production share of 40 per cent, not just royalties of 4 per cent.

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