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Eldorado Gold amends mining plans in Greece

Hellas Gold: Stratoni Port and Processing Facilities, Greece

Hellas Gold, the subsidiary of Canada-based Eldorado Gold Corporation has announced the suspension of some of its gold mining projects in northern Greece due to government inaction on mining permits.

Hellas Gold has invested over $ 700 million in its Skourias and Olympias mines since 2012. These two projects  created 2,000 jobs and over $ 120 million taxes for the Greek state, according to CEO Paul Wright [1].

Based on analyst estimates, Eldorado’s Greek assets make up about 30-40% of the company's net asset value [2] while the overall investment of Eldorado’s projects in Greece is estimated at over $1 billion [3].  Eldorado now expects to write down the value of its assets in Greece by $ 1.2 $ 1.6 billion [4].

In 2015, Eldorado announced additional investment plans of $ 310 million in the two mines, with plans to expand this to $ 700 million for processing by 2017. [5] [6].

With the SYRIZA election in January 2015, Hellas Gold began facing regulatory difficulties emanating from the Greek Ministry of Energy and Environment, Panagiotis Lafazanis. SYRIZA has supported the protests of local residents and other stakeholder groups against Hellas Gold’s mining in northern Greece, arguing that these mines posed a threat to the environment and to human health due to logging operations, erosion and the use of cyanide and other toxic substances in mining operations.

In February and August 2015, the Ministry revoked Eldorado’s licensing approvals, suspending the company’s project schedules and development budgets for its projects in Halkidiki [7]. Specifically, Hellas Gold had to temporarily suspend all its operations in the Skourias, Olympias and Stratoni mines, resulting in a lay off the majority of its employees for three months.

Another major outstanding approval concerns a building permit that would allow Hellas Gold to complete the construction of the Skouries processing plant, which has been delayed for over three years [8].

Hellas Gold Olympias Mine Greece

It should be noted that Hellas Gold’s environmental licensing for its projects in Halkidiki, monitored in the Environmental Impact Assessment (EIA), had previously been approved by three separate rulings of the Council of State, which is Greece's Supreme Court on administrative and environmental matters [9].

These approvals were revoked by the Ministry of Energy and Environment in August 2015 due to environmental concerns. Opponents of the mining claimed that Hellas Gold should have conducted tests of a flash-melting method at the mining sites, whereas Eldorado maintains it has conducted these tests at another mining site in Finland [10].

Hellas Gold has since taken legal action against the Ministry’s decision to revoke and delay outstanding routine permits and filed an injunction request before the Council of State. [11]

According to the Ministry’s latest information notice on the “unanswered clarifications on the Eldorado Gold case”, the Ministry claims that it operates within the framework of laws and court decisions in environmental and public interest [12]. Greek mining regulations however, foresee that the Ministry is required to grant operational permits within 60 days of issuing necessary documentation, forming a legal and contractual obligation of the Greek state.

Due to untimely issuing of permits and the unstable investment climate that Eldorado is facing in Greece, following projects are currently facing suspension of closure [13]:

Skouries Project (Halkidiki)

Construction and development activities at the Skouries Project with over $ 300 million invested to date are suspended.

Environmental protection works, care and maintenance activities will be continued in order to safeguard the environment and company assets at the Skouries site at a monthly cost of approximately $1 million.

Olympias Project (Halkidiki)

A refurbishment investment of approximately $ 55 million in the underground mine in order to raise mining capacity to 385,000 tonnes per year by 2017 has been suspended.

Supplemental documentation had been issued by Hellas Gold in December 2015. Should the Ministry fail to issue the installation permit by the end of the first quarter 2016, Hellas Gold will suspend all construction and development activities, leading to the furlough and potential termination of 500 employees.

Stratoni Mine (Halkidiki)

According to Eldorado’s studies, geological potential exists to expand resources and extend the mine’s current life time by three years. In order to allocate additional resources, a mining development and drilling campaign would be required at an estimated cost of $ 25 million over the next three years, assuming timely issuance of required permits. The company is currently re-evaluating its development plans.

Perama Hill and Sapes Projects (Thrace)

Approvals by the Ministry for the project’s Environmental Impact Study and for a drilling permit required at the Sapes Project in Thrace have now been pending for over two years. Eldorado has decided to downscale to care and maintenance works and maintain expenditures at the minimum level required to preserve the title and rights to both projects.

Hellas Gold Stratoni Loading Facility

Eldorado’s shares have lost 40% of value during the last 12 months, largely due to its problems in Greece. The company states that it is willing to recommence its suspended activities and investment plans in Greece upon the timely issuance of the necessary permits.

Local resistance to gold mining in northern Greece, however, has been a recurring event for the past 30 years, since the first TVX investment in Greece [14]. Local residents and municipal authorities have repeatedly claimed that mining threatens the environment and human health [15], and have remained unconvinced by successive companies that have promised development while safeguarding both.

Several issues support their suspicions:

  • The investment in gold mining assets by Hellas Gold, and the purchase of TVX’s Skouries Mine and resale by the Greek state in 2003 by the government of Konstantinos Simitis have been characterised as illegal state aid by the European Commission.

  • A Centre for Study on Multinational Corporations (SOMO)  also claimed that Eldorado’s use of tax optimisation and companies in The Netherlands had enabled it to avoid $ 1.7 million in taxes in Greece in the last two years. [16]

  • The true picture of environmental degradation is difficult to quantify given the current state of the project, but numerous reports indicate the magnitude of the threat to the environment.

In recent months, violence has erupted at several mining sites, with protesters firebombing mining equipment and attacking miners, and violence being employed by pro-mining agents. [17]

The support against or for mining has often become a political issue, with political parties of all ideologies choosing to support the protests depending on their own political calculations. The most recent iterations of this have seen some miners and their families locking themselves in the underground mines. [18]

The El Dorado / Hellas Gold investment in Greece illustrates the difficulties of licensing and operating strategic investments in Greece over time. A stable legal regime does not exist, as illustrated by the fact that three Council of State decisions have supported Hellas Gold’s contention that the investment complies with national regulations, and also by the European Commission case against Greece.

While “not in my backyard” protests against mining occur all over the world, the Greek case is particularly worrying given:

  • the readiness of political parties and individual politicians to intervene in order to garner political support;

  • the fact that at least two Greek laws or legal procedures are apparently being undermined by an elected government for political purposes;

  • the fact that the original transaction and investment structuring allegedly contravenes European Commission law on State Aid;

  • the fact that there are widespread suspicions of corruption and that the Greek state has not received fair value on the mining concession;

  • the fact that this occurs while Greece is in a dramatic economic crisis;

  • the fact that politically independent authorities or institutions which could function as an effective regulator do not exist.

This last point is perhaps the most corrosive of all, since political activities have undermined institutions in Greece for years. If there were an independent environmental agency or a public investment agency capable of providing real oversight on licensing and planning, the situation might be very different.


[1] Eldorado Gold Corporation, (2016). Eldorado Gold Announces Amended Investment Plans in Greece. [online] Available at:> [Acccessed 08 Feb.2016]

[2] Reuters (2016). “UPDATE 1-Eldorado Gold suspends much of its mine construction in Greece”. [online] Available at: [Acccessed 08 Feb.2016]

[3] Reuters (2015). “Greece halts activity at troubled Eldorado Gold Corp mine”. Financial Post, [online]. Available at:  [Accessed 8 Feb. 2016]

[4] (2016) “Eldorado Gold to book up to $1.6 billion charge after halting work in Greece”. [online] Available at: [Acccessed 08 Feb.2016]

[5] Eldorado Gold Corporation, (2015). Greece Update – 02 March 2015. [online] Available at:  [Acccessed 08 Feb.2016]

[6] Reuters (2015). “Greek gold miners protest against government decision to revoke license”. [online]. Available at:   [Accessed 8 Feb. 2016]

[7] Eldorado Gold Corporation, (2015). Greece Update – Aug.20 2015. [online] Available at:  [Acccessed 08 Feb.2016]

[8] Eldorado Gold Corporation, (2016). Eldorado Gold Announces Amended Investment Plans in Greece. [online] Available at:> [Acccessed 08 Feb.2016]

[9] Eldorado Gold Corporation, (2015). Greece Update – 02 March 2015. [online] Available at:  [Acccessed 08 Feb.2016]

[10] Reuters (2015). Reuters (2015). “Greek minister to meet Eldorado over gold mine closure on Monday”. Kathimerini, [online]. Available at:   [Accessed 8 Feb. 2016]

[11] Eldorado Gold Corporation, (2016). Eldorado Gold Announces Amended Investment Plans in Greece. [online] Available at:> [Acccessed 08 Feb.2016]

[12]CNN Greece (2016). “Ανακοίνωση του υπουργείου Περιβάλλοντος για την υπόθεση Eldorado μετά την απόφαση του ΣτΕ” [online] Available at:  [Acccessed 08 Feb.2016]

[13] Eldorado Gold Corporation, (2016). Eldorado Gold Announces Amended Investment Plans in Greece. [online] Available at:> [Acccessed 08 Feb.2016]

[14] (2016) “Greek court annuls Govt. decision to revoke Eldorado Gold licence” [online] Available at: [Acccessed 08 Feb.2016]

[15] Kathimerini (2015). “Thousands of Greek miners protest feared job losses” [online] Available at:  [Acccessed 08 Feb.2016]

[16] Hartlief I. et al (2015). Fool’s Gold - How Canadian firm Eldorado Gold destroys the Greek environment and dodges tax through Dutch mailbox companies, Somo Publications, Amsterdam (March, 2015) [online] Available at:   [Acccessed 08 Feb.2016]

[17] (2015).“ Greek protesters arrested in clash over Eldorado suspension of 2,000 workers“[online] [Acccessed 08 Feb.2016]

[18] Al Jazeera (2016) “Greek gold miners prepare to fight Syriza” [Acccessed 08 Feb.2016]

Photo: Hellas Gold Olympias Site, 2013. (c) Eldorado Gold.

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