Fallout continues over Eldorado Gold's threatened 'Grexit', feud with leftist govt

Tuesday, 12 September 2017 11:22

Monday's abrupt decision by a Canadian multinational to suspend operations in recession-battered Greece in the face of systemic delays it blames on state opposition to its mining activities generated a full-blown political problem for the embattled Tsipras government, both in the country and beyond.

Eldorado Gold CEO George Burns, during a press conference on Monday, called for face-to-face meeting between the management of Hellas Gold, Eldorado's subsidiary in Greece, and the Greek prime minister and his top ministers to overcome the obstacles blocking several licenses to operate the troubled gold mining concession. Hellas Gold has set up operations in eastern Halkidiki prefecture of northern Greece.

Burns added, however, that in his six months at the helm of Eldorado little has changed in the SYRIZA government's attitude towards the mining concession. The parent company has given a deadline by the end of the month to get the project back on track.

Eldorado Gold's subsidiary has sunk hundreds of millions of euros in its operations so far and employs a permanent workforce or around 1,200, but with the prospect of doubling the payroll when gold processing began.

Speaking on a local radio station on Tuesday, Hellas Gold CEO Dimitris Dimitriadis emphasized that whatever regulator obstacles prevent further licensing are "not environmental but strictly technical".

A day later, and amid the political "dust" kicked up in Greece and overseas, three main "scenarios" emerged over the future of the concession, the biggest industrial investment in Greece in many decades.  

The first holds that the main dispute between regulatory authorities and the company will be referred to arbitration - as the company has demanded for the past five months - in tandem with the immediate issuance of other pending licenses. The company has pointed to a commitment by Environment Minister Giorgos Stathakis that remaining licenses would be issued at the end of August.

Beyond the environmental impact of continuing the project, licenses for electro-mechanical equipment at the Skouries site have still not been issued by the relevant state services.

A second "scenario" on the horizon is that the main difference between the government and Hellas Gold will be defined ahead of possible resolution, but without issuing the routine licenses for the Olympiada and other sites managed by Hellas Gold.

A third and more ominous "scenario" is that the government will neither delineate the main difference blocking the mining investment, nor issue further licenses.

In a scathing report by pro-business Bloomberg, entitled "Greece: Where Literally Sitting on Goldmine Is Not Enough to Make Money," the international financial news site reminds that Eldorado Gold employs 2,400 people in Greece and has invested two billion USD so far in the country.

Bloomberg adds: "Eldorado Gold Corp. has put Greece on the spot."

London-based Teneo Intelligence co-president Wolfango Piccoli, a long-time Greece watcher, emphasized that whatever happens in the future, the damage done to Greece as an investment destination is significant.

Mujtaba Rahman, the head of Eurasia Group's Europe practice, referred to backtracking, warning that the development makes Greece's successful exit from the bailout program in 2018 more difficult.