Greece won’t negotiate with Eldorado unless it resumes operations

Greece won’t negotiate with Eldorado unless it resumes operations

Construction of a concrete batching plant at Skouries mine. (Image courtesy of Eldorado Gold)

Greece’s left-wing government is asking Canadian Eldorado Gold (TSX:ELD) (NYSE:EGO) to resume halted mining operations and preserve jobs currently in the line as a condition for the two parties to continue talks on the country's biggest foreign investment.

Environment and Energy Minister, Panos Skourletis, accused the Vancouver-based firm of staging a “political show” and of “blackmail”, adding that Eldorado should understand that “Greece is a modern European democracy,” according to local paper The Greek Reporter.

Eldorado has been in a dispute with the Greek government after Skourletis revoked last year the company's permit to further develop its Skouries mine in northern Greece.

The country’s ruling Syriza party has opposed the gold project, in the Thrace region, siding with many local residents who have staged several demonstrations. They claim the mine will destroy the environment and harm the area’s tourism potential.

There have also been both pro-mine protests, including one in April 2015 that attracted an estimated 4,000 supporters of the Skouries mine and forced police to shut down major roads in Athens for several hours.

Ultimatum

On Monday Eldorado said it would suspend construction at the Skouries project, putting more than 600 jobs at risk, after a year of confrontations with local authorities that included permits being revoked and delayed by the state multiple times.

The company also warned it would do the same at its Olympias mine, also in northern Greece, which would leave another 500 unemployed. The company said it would go ahead if it didn't secure necessary permits by the end of March.

Eldorado has already halted development work at its Perama Hill and Sapes projects.

The company is not the first miner to struggle in Greece. In the 1990s, the Skouries and Olympias projects belonged to TVX Gold Inc., which failed to develop them because of local opposition. Eldorado has said it believed it could do better, in part because of its experience in developing mines in both neighbouring Turkey and China.

Currently the company employs 2,000 workers in an area with an unemployment rate above 30%.