Skouries is a small town in the province of Halkidiki, peninsula also known as the secret paradise of Greece.

The wild nature, rich biodiversity and mixture of mountains, forests, sea and beach make this region one of the most popular touristic places in Greece. Its inhabitants are almost all dependent on tourism, fishing, beekeeping and/or agriculture. This makes the region very sensitive to the arrival of large-scale mining activities.

Skouries - Halkidiki

Skouries is a small town in the province of Halkidiki in northern Greece. This peninsula is also known as the secret paradise of Greece. The wild nature, rich biodiversity and mixture of mountains, forests, sea and beach make this region one of the most popular touristic places in Greece. Its inhabitants are almost all dependent on tourism, fishing, beekeeping and/or agriculture. This makes the region very sensitive to the arrival of large-scale mining activities.

For decades, mining companies have been trying to gain access to the minerals (mainly gold and copper) under the surface of Halkidiki. According to estimates, this could generate profits of 15,5 billion euros. This extraction, however, is incompatible with the current activities in the region. Tourists are attracted each year by the exceptional ecosystems (with one of the last ancient forests of Europe) with their clean air, expansive beaches, idyllic rivers… fishery and agriculture are the main income sources for the inhabitants in this area. This was emphasized by the Greek Supreme Court, that concluded ten years ago that the economic benefit of mining wouldn’t outweigh the ecological impact of the mining, including air pollution, acid mine drainage, exhaustion and pollution of groundwater, rivers and the sea, and increase of heavy metals in the food chain.

This ruling made for around ten years of silence on the mining opportunities of Halkidiki. In 2009, the economic crisis hit Greece worse than elsewhere. A combination of high rates of unemployment and an environment minister who was desperate to prove to Europe that he could attract foreign investment, opened up the mining debate once again. The extraction of 380 million tons of ore over the next 25 years was to lift Greece from the crisis. In 2011, the Canadian company Eldorado Gold bought 95% of the shares from European Gold Field, for about 1,8 billion euros.

For decades, mining companies have been trying to gain access to the minerals (mainly gold and copper) under the surface of Halkidiki. According to estimates, this could generate profits of 15,5 billion euros. This extraction, however, is incompatible with the current activities in the region. Tourists are attracted each year by the exceptional ecosystems (with one of the last ancient forests of Europe) with their clean air, expansive beaches, idyllic rivers… fishery and agriculture are the main income sources for the inhabitants in this area. This was emphasized by the Greek Supreme Court, that concluded ten years ago that the economic benefit of mining wouldn’t outweigh the ecological impact of the mining, including air pollution, acid mine drainage, exhaustion and pollution of groundwater, rivers and the sea, and increase of heavy metals in the food chain.

This ruling made for around ten years of silence on the mining opportunities of Halkidiki. In 2009, the economic crisis hit Greece worse than elsewhere. A combination of high rates of unemployment and an environment minister who was desperate to prove to Europe that he could attract foreign investment, opened up the mining debate once again. The extraction of 380 million tons of ore over the next 25 years was to lift Greece from the crisis. In 2011, the Canadian company Eldorado Gold bought 95% of the shares from European Gold Field, for about 1,8 billion euros.

For decades, mining companies have been trying to gain access to the minerals (mainly gold and copper) under the surface of Halkidiki. According to estimates, this could generate profits of 15,5 billion euros. This extraction, however, is incompatible with the current activities in the region. Tourists are attracted each year by the exceptional ecosystems (with one of the last ancient forests of Europe) with their clean air, expansive beaches, idyllic rivers… fishery and agriculture are the main income sources for the inhabitants in this area. This was emphasized by the Greek Supreme Court, that concluded ten years ago that the economic benefit of mining wouldn’t outweigh the ecological impact of the mining, including air pollution, acid mine drainage, exhaustion and pollution of groundwater, rivers and the sea, and increase of heavy metals in the food chain.

This ruling made for around ten years of silence on the mining opportunities of Halkidiki. In 2009, the economic crisis hit Greece worse than elsewhere. A combination of high rates of unemployment and an environment minister who was desperate to prove to Europe that he could attract foreign investment, opened up the mining debate once again. The extraction of 380 million tons of ore over the next 25 years was to lift Greece from the crisis. In 2011, the Canadian company Eldorado Gold bought 95% of the shares from European Gold Field, for about 1,8 billion euros.

Hellas Gold, a subsidiary of Eldorado, is developing today a large open pit gold- and coppermine in the middle of a hill that used to be covered with ancient forest. Over 180 hectares of valuable forest have been cleared to make way for the mine, a processing plant and two large tailings dams. The Halkidiki mine would, together with a mine in Thrace, make Greece the largest producer of gold in Europe.

Now, Hellas Hold has put their plans on hold, they don’t like the attitude of the new Greek government. The department of Energy and Environment is blocking the licenses, which are required to continue their work. Eldorado Gold had spent 300 million US dollars on this project. Their other project in Halkidiki, the Olympia’s project, will be stopped too in March 2016, if they don’t get the required licenses by then. This project employs five hundred people.

Hellas Gold is still waiting for the approval of the government, but by the opposition of severl environmental groups, the government don’t give the licenses. These groups suggest that the mining project in Halkidiki will harm tourism and the environment.

In addition, the government has had some licenses revoked as in previous situations. Eldorado Gold is therefore currently caught up in al legal battle to overturn these rulings. The CEO of the company is frustrated and claims that Skouries is becoming a political tof of the Greek government. Eldorado Gold is one of the largest foreign investors in Greece, but whether it will be long is questionable. Their patience is running out. Then Eldorado Gold would also shut down their projects in Thrace. The company took the decision to halt these projects because they are not willing to continue as long as there is no clear way forward, and as long as the Greek government will assume a constructive attitude. The company hopes to change this by 2016.

Paul Wright, CEO of Eldorado Gold, claims that each stopped project will cause a loss of at least 500 jobs. Consequently, besides the protests against the mine, there are unfortunately also some pro-mining protest.

Skouries mine impact

The Halkidiki region is rightly regarded as one of the best kept secrets of Europe. The wide variety of ecosystems is one of the main reasons. The region contains pristine ancient forests, beaches, lakes, rivers and mountains. This makes for a very rich biodiversity with many protected plant and animal species.

Flora

The majority of the forests are beech (Asperulo Fagetum). These are unique in Europe because they have escaped both natural and human destruction over the past centuries. An important reason is the fact they had a status as ‘holy forests’ in past centuries.

The site the ‘Hellas Gold’ project has already deforested, consisted of woodlands with 400-500 year old trees, with a height of 15 meters and a diameter of 60 centimeters. The site is located in the middle of an ancient forest, and it is expected that mining impacts will extend beyond the deforested areas alone. Nearby, trees older than 2000 years can be found, with a height of 35 meters.

Fauna

These unique ecosystems are characterised by a rich fauna. Around 159 bird species and more than 40 different mammals can be found. Because of the protected status of this region, the prohibition of hunting in large parts of it, and the absence of other forms of disturbance from humans, this region serves as an important ecological stepping stone. Many forest species and wildlife are dependent on this kind of undisturbed areas for their reproduction and some forest species would never survive if these regions were destroyed.

Water

It’s expected that groundwater reserves will be heavily polluted by the future plans of the mine. Firstly, minerals will be separated from ‘waste’ using cyanide (although Eldorado Gold provisionally claims that an alternative method will be used), which causes ground and surface water pollution. Also a huge amount of groundwater will be pumped up (up to 480 cubic meters) when the mine is fully operational. This will lower the groundwater table (up to 663 meters under the sea level in Olympia), which will cause an influx of saltwater. That will compromise the fresh water supply of more than 40 000 inhabitants of the region.

Air

The environmental impact assessment of the company shows that the legally imposed limits of pollutants will clearly be exceeded. In Skouries alone, considerable air pollution is expected, with high concentrations of heavy metals, nitrogen oxides, carbon monoxide, volatile organic compounds and sulfur compounds. The suspended particles will contain arsenic, manganese, cadmium, antimony, zinc, mercury, etc…

Many of these elements are linked to neurological damage in both children and adults. Estimates show that the PM 10 and PM 2.5 emissions (fine particles) will ultimately be 950 tonnes per year, and that these particles will spread out over large distances. The technical report of the Skouries project makes clear that little regulation is imposed on the operation, for example in relation to these aspects of air pollution.

The economic consequences of this mining project will be enormous. The Greek government sees the project as a way out of the crisis. Eduardo Moura, vice president of Eldorado and General Manager of the Greek branch, states that the Skouries project offers opportunities: “It creates jobs, improves infrastructure, generates tax income and income from export”. This claim is in sharp contract with the outcomes of the economic analysis made by SOMO (Centre for Research on Multinational Corporations): “Eldorado has a highly developed tax evasion structure with 12 Dutch mailbox companies and several daughter companies in Barbados, the British Virgin islands and the Cayman Islands.” There are strong reasons to believe that Eldorado Gold will not make any significant contributions to the country. Because of the lack of good legislation about gold mining in the Greek Mining Code, the country doesn’t raise royalties on mining concessions and so the Canadian company will only pay taxes on the wages of its employees. In 2013 there were 1 250 people employed, in 2014 this amounted to 1 500 and by 2017, 2 000 people will be employed there. After the mining activities end (in 7 years), this tax income will fall away completely.

Last year, Eldorado stated that they will put in place their own royalty plan so that the Greek state would be paid 3 million euros yearly. This way the royalties wouldn’t be enforceable. This spontaneous proposal is not so surprising, given that the expected profits from the mine are extremely high. If the company extracts 85% of the 100 tonnes of gold, and much more copper reserves, this should generate around 10 billion euros (at current market prices). This means Eldorado is offering to contribute minimum 0.2% of its profits to Greece in the form of royalties.

The Greek government failed to make an economic analysis on the impact that the air, water and soil pollution have on the current revenue sources in the Halkidiki region. Agriculture (grazing land, organic farming, and beekeeping) and fishing (open water and aquaculture) are the main income sources. These will be strongly affected by the pollution of air, water and soil. In addition, small-scale activities such as forest management, picking berries/herbs and hunting are an important addition to other incomes. Although the economic value of these activities is often ignored, experts emphasize their significant impact on the livelihood of local communities. The deforestation and forest degradation caused by mining will strongly influence these activities.

A final, important economic activity that characterizes the Halkidiki-region is tourism. Tourists from home and abroad are an important source of income for the people in this region. Calculations say that 15-20% of the GDP of Northeast Halkidiki is related to tourism. Pollution, destruction of historical sites and deforestation will have a negative impact on the region’s image and cause a decrease in tourism in the long term. Specialists consider the actual calculation impossible but agree that the balance is negative for the region. Although the short-term profits for Eldorado Gold are relatively easy to calculate, the long-term costs of job loss in the tourism, agriculture and fishing industry, as well as the ecological and archeological damage, are almost impossible to express in a monetary value. The ecological study by Hellas Gold also leaves out the economic impact of the ecological damage from mining activities.

Because of the lack of regulation, Eldorado Gold is not held responsible for the ecological damage. Both the decreasing value of the land due to the irreversible ecological damage, the remediation of the repairable ecological impacts and the influence on other economic sectors will therefore have to be paid by the Greek society. An impact analysis by the environmental committee of the Aristoteles University in Thessaloniki concludes that economic growth in the mining industry does not contribute sustainably to the interests of society.

Updates

In Greece, the mining company Eldorado Gold has produced 723 532 ounces of gold in 2015 and forecasts the production in 2016 to be of 565 000-630 000 ounces. The company operates the Kassandra mines (Skouris, Olympias and Stratoni) on the Halkidiki peninsula near Thessaloniki, through the company Hellas Gold SA. Eldorado also possesses through their companies the Thracean Gold Mining SA and Thrace Minerals SA respectively, the Perama Hill and Sapes mine sites in the Thrace region (North-eastern Greece).

In Skouries and Olympias alone, about nine million ounces of gold, 72 million ounces of silver and 767 000 tons of copper can be extracted. This is worth more than 13 billion dollars. Eldorado Gold invested since 2012 some 700 million dollars in their mining projects in Skouries and Olympia and wanted to spend there 1 billion dollars more. Today about 2 000 people and 3 000 contractors work for the company in Greece. In the 1990s, before Eldorado Gold, TVX Gold Inc. tried to develop the mining sites at Skouries and Olympias in Halkidiki. Because of delays and opposition of the local population under the lead of Antigold, Save Skouries and the “Save the Homeland of Aristotles” campaign in 2002, they were forced to, first, merge with Kinross, a Canadian miner, before they finally went bankrupt in 2003.

Tensions heightened between the government and Eldorado Gold after the former Minister of Energy and Environment Skourletis revoked in August 2015 the permits to continue their project in Skouries. He judged the environmental tests to be invalid. Skourletis stated also that the company hadn’t paid taxes since 2007. Eldorado Gold affirmed that they hadn’t paid any corporate taxes, but that they did contribute 130 million dollars in value added tax (VAT) and social security.

Eldorado Gold managed to avoid paying corporate taxes in Greece thanks to a tricky set-up. They built up an intra-company lending scheme in 2012, to transfer money between their activities in Greece and mailbox companies in the Netherlands and in Barbados. The operations in Thrace and Halkidiki are fully owned by Dutch mailbox companies, called Eldorado Thrace (Greece) BV, Thrace Investments BV and Eldorado Gold (Greece) BV. They finance the sites with bonds of their Dutch companies, which send the interests of these bonds to the mailbox company in Barbados. These bonds from the Netherlands come in their turn from loans of the Barbados company.

This means that Eldorado Gold, like other companies, have only a postal address in the Netherlands without performing real activities there. Still, thanks to having an address in this country, they can enjoy the fiscal and tax treaty benefits. The main intention is to transfer money from a country with high taxes to one where low taxed are levied. Interest payments on the bonds and loans between the three countries are almost untaxed. This means that the fiscal advantages of the mines are small for Greece and the needed money for development leaves  the country.

However, not everyone supports Skourletis. There are opponents and supporters of the mining site. The left-wing government’s resistance to the Eldorado’s projects caused protests from opposition parties, business groups and labor unions. They believe the government’s attitude gives the wrong impression towards international and domestic markets. The mining company reproached the government of delaying the permits and, as a result, they quitted the development of the site in Skouries. The same will happen in Olympias, if they don’t get the necessary permits by March 2016. As a consequence, 1 100 jobs will get lost for both sites together.

Also the projects in the Perama Hill and Sapes are stopped, but could be resumed later. The main reason for this is that the company is tired of waiting for the government’s approvals and permits for these sites, which have taken already more than two years. After the ban of the Greek government to further develop the site in Skouries, the Canadian mining company Eldorado Gold appealed to court. The Greek court already agreed with Eldorado in November 2015, but a final decision still had to be stated. Finally, Eldorado Gold won the case in their final decision in January 2016. But local action committees in collaboration with Antigold will continue the struggle and won’t stop until Eldorado leaves Halkidiki.

Canada’s Eldorado Gold’s (TSX:ELD)(NYSE:EGO), Greece’s biggest foreign investor, has decided to suspend all operations in the country due to government delays in issuing permits for Skouries and Olympias, two of the company’s key projects.

Chief executive George Burns said in the statement that the company was “unable to continue investing” in Greece because of the lengthy wait for the necessary licences, which has negatively impacted Eldorado’s project schedules and costs. The suspension will take effect on September 22nd and includes all of the company’s budgeted investments in exploration, community and infrastructure development.

“It is extremely unfortunate to find ourselves at this impasse when we should be advancing an important commercial project in partnership with Greece and adding another 1,200 jobs to our current workforce of approximately 2,400 people in Greece,” Burns said.

Shares fell on the news, trading almost 7% lower than their closing price Friday in both, the Toronto and New York exchanges.

Environmental protection works and care and maintenance activities will continue, the Vancouver-based miner said, adding it expects to spend about $30 million in the operations shut-down, with sustaining maintenance costs of approximately $25 million a year.

Not including Stratoni’s $2 billion acquisition, Eldorado has invested about $1 billion in the European country since 2012, and such figure would double if the company could fully develop its other assets in Halkidiki, northern Greece, the company said.

The mining company, which already operates Stratoni, has been trying to develop the Skouries and Olympias projects in the north of the country for years, but local opposition and an ongoing back-and-forth with authorities have delayed progress.

Several people in the community oppose mining in the area because they believe the activity would hurt the regional tourism industry, destroy forests and pose a contamination risk to the groundwater.

Eldorado claims that along with generating new jobs and bringing hundreds of millions into Greece’s struggling economy, they have taken all necessary measures to protect the surroundings. Further, the company says it’s still carrying out environmental clean-up work even of its predecessors.

One of the biggest differences between the company and Greek authorities revolves around the testing methods applied to comply with environmental regulations at Skouries.

Safer jurisdictions

Eldorado has slowly reduced its international footprint in the last two years, beginning with the sale of all its Chinese assets in 2016 and the decision in 2017 to indefinitely shelve expansion plans for Kışladağ mine.

The company also postponed recently a decision on developing a project in Brazil, allegedly due to low gold prices, and went through some leadership changes, with the appointment of one of Goldcorp’s top executives as CEO.

Instead, the company is seeking to strengthen its position in its home country. In July 2017, it completed the acquisition of fellow Canadian miner Integra Gold (TSX-V:ICG), gaining access to the Lamaque project near Val-d’Or, Quebec. That asset has the potential to produce 123,000 ounces of gold annually on average over 10 years, according to a preliminary economic assessment completed in February 2017.

This is not the first time Eldorado has halted operations in Greece, but it is definitely the most drastic one. In January 2016, it suspended work at Skouries and threatened with laying off 600 workers following protests by local residents and yet another fall-out with the government. Works were resumed about five months later.

Source: Mining.com