Eldorado Gold suspends the development of the copper and gold mine in Skouries, Greece. They also announced the possible closedown of activities at Olympias (the underground mine held in the same Halkidiki region), should the Greek government not issue the permits requested. The news generated a wave of mistrust in the company’s ability to develop their mining projects in the European Union, which entailed a rapid 19% drop in its shares at the stock exchange.
This low-cost company, known for the projects developed in countries where other mining operators failed, is heavily challenged. They have to justify before investors the loss of more than 300 million dollars, the amount spent in Skouries so far. The decision to suspend activity could no longer be avoided as the issuance of a construction permit which would have allowed the completion of the processing plant is still pending. The mining project at Skouries faced from the very beginning opposition from the local community, who sees the mine as a direct threat upon water resources in Halkidiki peninsula, the third most popular tourism destination in the country.
These new financial difficulties come on top of the financial losses incurred in 2015 with the projects held in the European Union. Eldorado develops the Certej project in Romania, currently under the permitting stage, an investment at the limit of profitability. In June 2015 Eldorado Gold notified their shareholders on the impairment of the mining project at Certej as a result of the depreciation of equipment and land purchased with the Certej mine. The loss of about 250 million dollars was announced based on a reevaluation of the assets acquired, while the mining operator had to publicly admit that their market value is much lower. On the other hand the company had to pay $63.5 million related to an increase in the corporate income tax rate in Greece.
All these financial losses occur in the context of very low trading prices for copper and gold on the world market. “Considering that the good’s price on the market is significantly lower than its production cost, it will be very difficult for Eldorado to obtain funding for developing new mines – either in Greece or in Romania”, said Roxana Pencea, Campaign Manager at Mining Watch Romania.
Following Eldorado’s announcement, the Greek Minister of the environment, Panos Skourletis said: “The Government will not be blackmailed. The decisions it makes are based on the public interest and environmental protection and will be taken after studying all data.” At the same time the minister fined Hellas Gold with 1.7 million Euro for a total of 21 breaches of environmental protection regulations (for offences committed between 2012-2014)”.
“In their decision to invest in these mining projects Eldorado Gold has constantly ignored the local community and Greek laws. By forcing the implementation of this project against the will of local people, Eldorado undertook the political risk that their projects would be rejected one day. Their ease in risking investors’ money in this case should be a strong alarm signal for all those who fund the opening of new gold mines in Europe”, said Maria Kadoglou from Hellenic Mining Watch.
- Skouries is the largest of the three mining perimeters called ‘Cassandra mines’. These were transferred in 2003 from TVX Hellas SA to the Greek state, for 11 million Euros. On the same day they were sold, without any public bid, at the same price, to Hellas Gold SA. Now 95% of Hellas Gold is held by Eldorado Gold (TSX:ELD), a Canadian company with projects in Romania, Turkey, Brazil and China.
- The gold mine at Certej would be the first cyanide gold mining operation opened in Romania. The mining project is held by Eldorado Gold through its subsidiary Deva Gold. The first construction permit for Certej mine was declared illegal and cancelled in court. The project footprint has 456.2 ha, currently covered by forests, pastures, agricultural land and residential areas. A significant part of the project is located in the Natura 2000 site – ROSPA 0132 Metaliferi Mountains. The mine, having an estimated annual output of 3 million tonnes, requires deforestation of 187 ha to locate two open pit mines and two tailings dams. The tailings dams, with 169 m high and 70 m high rockfill dams respectively, are an additional issue of concern as they will be located in the close vicinity of several densely populated villages.