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				Perth Miners Blamed For Europe Cyanide Disaster

Fatal shore ... dead fish pile up along the banks of Lake Tisza in Hungary as the poisoned water spreads.

By MARIAN WILKINSON, GREG BEARUP and SIMON MANN, Sidney Morning Herald, Feb. 10, 2000

The head of the embattled Perth mining company Esmeralda admitted last night that it took more than two days to stop a cyanide spill from its Romanian mine which is being blamed for triggering one of the worst environmental catastrophes in Eastern Europe.

The spill of 100,000 cubic metres of cyanide-contaminated water began some time on January 30 and was not stemmed until early on the morning of February 2 following the intervention of emergency response crews, Esmeralda's chairman, Mr Brett Montgomery, said.

Hungarian media reports now claim that the spill is responsible for poisoning the drinking water of two million Hungarians and killing thousands of birds and fish along the Tisza River, Hungary's second-largest river after the Danube.

Yesterday, nine days after the accident, water authorities were reported as saying cyanide concentration in a reservoir supplying the city of Szolnok, 80 kilometres south-east of the capital, Budapest, was still 28 times the acceptable level.

But in Perth last night Mr Montgomery was strenuously defending his company, saying the impact of the spill was still unknown.

He said the company was still waiting, eight days into the disaster, for the results of water testing by mine officials and Romanian environmental authorities before it could answer the claims. It is understood that those results could be available tomorrow.

The company said the spill or "overflow" from the tailings dam was a result of heavy rain and snow in late January which flowed into the nearby Lapus River then joined another tributary that travels 75 kilometres to Hungary.

While indicating that the company would contest some of the claims made in Hungary, Mr Montgomery conceded that local Romanian authorities had classifed the spillage as "a serious accident".

The disaster has turned the spotlight on a small group of Perth mining entrepreneurs who have spent the past decade developing the $45 million mine in a deal with the Romanian State mining company.

Brett and his brother, Mr Max Montgomery, along with a long-time player in the Perth mining scene, Mr Jamie Taylor, pushed Esmeralda into its Romanian venture in 1990. Their plan was to treat tailings from old mines, using cyanide leaching, to recover gold.

When the plans for the project were first announced, Romanian authorities viewed it as an "environmental clean-up program" because it would re-treat the old tailings dams and it was financially supported by the European Reconstruction Bank.

A Perth engineering company, Lycopodium, built the plant and its managing director also invested heavily in Esmeralda, along with several prominent Perth broking businesses.

Now, in the face of the disaster, all are trying to hold their nerve after trading was halted in the company's shares yesterday when the price plunged by more than a third.

Mr Peter Gunzberg, one of the biggest investors, defended the company, telling the Herald: "Esmeralda don't believe it is the catastrophe that has been portrayed; there hasn't been hard evidence released yet to enable a proper conclusion to be drawn."

Mr Brett Montgomery is to face the media tomorrow morning when he is expected to mount a vigorous defence of the company, talking up its ability to cope with the disaster.

But both a spokesman from the Hungarian Foreign Ministry and a Hungarian Embassy official in Canberra were flagging a massive compensation case over the spill, a move that could spell financial peril for the Perth miners.

The mining company may also be forced to explain why it failed to inform the Perth Exchange and investors of the spill eight days ago.

According to Mr Brett Montgomery, the executives were still trying to assess the damage and were drawing up a statement yesterday when the news broke.

The Howard Government has so far has made little comment on the disaster although Mr Montgomery told the Herald last night that he had been involved in discussions yesterday with the Department of Foreign Affairs and Trade, whose officials are gathering information in Hungary and Romania.

A spokesman for the Environment Minister, Senator Hill, rejected calls last night by the Greens and the Democrats to legislate to ensure that local mining companies followed Australian environmental standards when working overseas.

Mr Montgomery said that environmental standards in Romania were "very high" and the incident was a result of "unseasonally high rainfall and snowfall".