January 12, 2016 / 11:21 AM / in 4 years

UPDATE 2-Eldorado CEO says mining halt in Greece will cost 600 jobs

(Adds details from conference call)

ATHENS, Jan 12 (Reuters) - Canadian miner Eldorado Gold Corp expects the suspension of much of its mine construction and development activity in Greece after a confrontation with the government to cost more than 600 jobs, its chief executive said on Tuesday.

The Vancouver-based miner had to resort to Greece’s top administrative court to annul a government decision that revoked a mining permit in northern Greece on environmental concerns.

A majority of judges of Greece’s top administrative court ruled in favour of Eldorado in November, but the official decision is still pending.

Eldorado’s shares were down 18 percent at C$3.58 in early trading in Toronto on Tuesday.

The government revoked Eldorado’s permit in August, disputing the miner’s tests for a so-called flash-melting method to ensure against environmental damage.

“Our investment is treated as a political toy, we never anticipated this,” CEO Paul Wright said in Athens. “Failure to receive timely licenses and permits has proved very expensive.

“It’s bad for Greece because it is seen as such from off-shore,” he said.

Eldorado said on Monday it would suspend construction at the Skouries project and warned it would do the same at its Olympias project if it did not receive a permit by the end of March.

If Olympias, also in northern Greece, does not receive permits, another 500 jobs will be cut, Wright said on a conference call.

Wright will meet leaders of opposition political parties and Energy Minister Panos Skourletis in the next days.

Skourletis told Parapolitika radio earlier on Tuesday the government would not be blackmailed.

“Judging from the behaviour of the company, it is another attempt at creating blackmailing situations. No company, Greek or foreign can blackmail the Greek state,” he said.

Eldorado has said it has created around 2,000 direct jobs in Greece, which suffers from a jobless rate of 25 percent, the highest in the euro zone.

The company’s Greek assets make up about 30-40 percent of its net asset value, according to analysts’ estimates.

Eldorado’s shares have shed 40 percent in the last 12 months, largely due to its problems in Greece.

Wright said the treatment of Eldorado by the government would be seen as a litmus test by other potential investors.

Asked whether the company was considering pulling out, Wright said: “No, we are here for a long haul.”

However, Wright said that while the company remained committed to Greece, it was actively looking at alternatives to grow its business. (Reporting by George Georgiopoulos and Lefteris Papadimas in Athens, and Amrutha Gayathri in Bengaluru; Editing by Louise Heavens and Saumyadeb Chakrabarty)

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