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Orthodox priest Christodoulos Aggelouglou has joined the protesters. (Nikolas Giakoumidis/AP)
Orthodox priest Christodoulos Aggelouglou has joined the protesters. (Nikolas Giakoumidis/AP)

Eldorado Gold’s big Greek mining problem Add to ...

The mines fell on hard times in the late 1980s after its industrialist owner, Alexander Athanasiadis, was killed by the infamous November 17 terrorist group. The mines were nationalized, then sold to Canada’s TVX Gold in 1995. In 2002, Greece’s State Council ruled that the potential risks of the mines’ redevelopment would exceed the benefits and, a year later, TVX, by then part of Kinross Gold, abandoned the Halkidiki mines.

In a rapid-fire sequence of murky events that is still debated today, TVX’s Greek assets were transferred to the Greek state for €11-million in December, 2003.

The state owned them for only a few hours before flipping them for the same price to a new company called Hellas Gold, which was backed by Aktor, Greece’s largest construction company (and now Eldorado’s construction partner and one of its investors). There was no auction and Hellas found itself the lucky owner of one of Europe’s richest ore bodies. Later, the European Commission determined that the sale to Hellas Gold was in breach of European Union state aid rules because it was done well below market value.

“The mines were sold with no tender, no competition,” said Maria Kadoglou, 45, an unemployed physicist who, along with her civil engineer husband, Tolis Papageorgiou, has devoted 15 years to fighting the mining developments. “It’s a scandal.”

But Mr. Pitcher, the Eldorado president, says there was no scandal because “there were no other takers except Hellas Gold” and that the mining area was effectively worthless at the time because “this was an unpermitted project with significant debt at the time of low metal prices.”

The mines’ value wouldn’t stay low for long. In 2007, yet another Toronto-listed company, European Goldfields, arrived on the scene. It bought Hellas Gold, which ultimately received government approval for the development’s crucial Environmental Impact Assessment (EIA) after what mine opponents called a “shockingly” inadequate public consultation process.

Eldorado, a mid-tier gold producer with operations in Turkey, Brazil, Romania and China, bought European Goldfields for about $2.5-billion in shares in late 2011, right at the top of the market. Equipped with the EIA, it set out to transform itself, and the Halkidiki region, with one of the most ambitious mining projects in Europe.

Eldorado is one of the Canadian mining industry’s more remarkable growth stories. Through acquisitions and mine development, it has doubled its production and reserves in the past five years. In 2012, its proven and probable reserves were 25.7 million ounces of gold and 72.3 million ounces of silver. Profit last year was $305-million on sales of $1.15-billion. But for Eldorado to meet its ambitious target of more than doubling production to 1.5 million ounces a year by 2015, the Greek mine plan must work.

The Greek mining portfolio is a four-property grab bag of existing and future developments, one of which – Stratoni – produces only lead, zinc and silver. The other three – Olympias, Perama Hill and Skouries – are primarily gold plays. Skouries is by far the biggest of the trio and the focus of the protests. About $450-million will take it from a relatively small open-pit mine to an underground monster that will produce 140,000 ounces of gold a year. Production is to start in 2015.

But, alarmingly for the anti-mine crowd, Skouries can’t be built without removing at least 180 hectares of forest and, they argue, depleting a precious aquifer. Eldorado claims there is more than enough water for everyone. But protesters say the combined projects are simply too big for the area and will put too much stress on the environment.

“The carrying capacity of the region will be exceeded by far,” said Kostas Katsifarakis, a civil engineering professor at the Aristotle University of Thessaloniki and co-ordinator of the school’s environment council, which did a study on the Skouries’ impact on the aquifer. “I think [Skouries] should be stopped, definitely yes.”

End of paradise or job boom?

The municipality of Aristotle, the region with the 16 villages that encompasses the Eldorado mining operations, has about 19,000 residents. The unemployment rate is atrocious, perhaps 30 per cent or more. Jobs are badly needed.

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  • Eldorado Gold Corp
  • Updated July 28 9:31 AM EDT. Delayed by at least 15 minutes.


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