Canada’s Eldorado Gold Corp threatened on Monday to suspend investment at its Greek mines and development projects, blaming delays in getting permits for jeopardizing one of the biggest investments in Greece since the country’s debt crisis.
Eldorado said no additional investment would be made into the Olympias and Skouries projects and the Stratoni mine in Greece unless it received outstanding permits.
It will place all its Greek projects, where it is targeting copper, gold, lead, silver and zinc, on care and maintenance from Sept. 22.
The Skouries mine on the Halkidiki peninsula, a landscape of pristine beaches and lush forests, has long been a flashpoint with the authorities and a test of Greece’s resolve to push ahead with foreign investments.
Differences have lasted for years over testing methods applied to comply with environmental regulations and the project has provoked violent protests by locals who fear it will destroy the environment and Halkidiki’s tourist riches.
The uncertainty about Eldorado’s Greek projects has weighed heavily on its share price, which is down 48 per cent in the past year, touching a 14-year low of C$2.24 on Aug. 4. Its shares were down 6 per cent to C$2.34. in early trading on Monday.
Eldorado’s Greek assets represent about 40 per cent of the company’s net asset value, according to RBC Capital Markets analyst Dan Rollins.
In announcing its decision, Eldorado said the delays had hurt the company’s project schedules and budgets, ultimately hindering its ability to invest and do business in Greece.
“I am disheartened to state that no additional investments will be made into Greece after September 22,” Chief Executive George Burns told reporters in Athens. “We cannot continue to put capital at risk without these permits.”
Speaking in a conference call later on Monday, Burns said he hoped Eldorado’s decision “will motivate the government to move in the proper direction.”
The suspension marks a tougher stance toward Greece by Burns, who became chief executive in April. His predecessor, Paul Wright, took Eldorado into Greece with the nearly $2-billion purchase of Skouries, Olympias and Stratoni in 2012.
The company has since invested over $1-billion in the country and Burns said “that figure could be double if we have the support and cooperation of the Greek government.”
Eldorado also suspended operations in Greece for several months in 2016 after a confrontation with the government which revoked a mining permit due to environmental concerns.
Greece, which has received three international bailouts since 2010, is seeking investments to rebuild its economy and help it emerge from years of economic crisis.
During a visit by French President Emmanuel Macron last week, Greek Prime Minister Alexis Tsipras urged French businesses to invest in Greece and assured them “you won’t regret your choice.”
But while publicly the leftist-led government backs investment, investors often complain of hurdles such as excessive red tape and labor union and political resistance.
Eldorado has applied for licensing but the Greek energy ministry has said it would launch an arbitration process this month to ensure the company’s Greek unit, Hellas Gold, respects its contractual obligations.
Eldorado said it was awaiting additional details from the government about the arbitration process and would reassess its investment options in the country after the approval of the permits.
Burns said he was hopeful Eldorado could resolve the issue in talks with the government.
“I’m confident these mines will be built … these are fantastic assets and there is no credible issue in front of us for us not to be moving forward.”
Responding to Eldorado’s decision, Greek Energy Minister George Stathakis said environmental licensing involved lengthy and detailed procedures in order to comply with current European and national legislation.
“It is rather clear that the company is not accustomed to operating in European countries,” Stathakis said in a statement.