Greece welcomes gold miners

 

8211226

LONDON — For three years, Steve Sharpe's company prodded Greek officials for permission to drill for gold. Before approval was finally granted this year, European Goldfields Ltd.'s battered share price attracted a takeover bid.

"No way on earth would I go back to Greece," said the Canadian producer's former head of business development, who left to head a mining company across the border in Macedonia.

Delays like Sharpe's are less common after the economic collapse in Greece spurred a new urgency in the government to create jobs. Eldorado Gold and Glory Resources are developing four mines that should turn Greece into Europe's biggest producer of the precious metal by 2016.

Gold mining is gathering momentum after Greece began what it called a "fast-track" approvals program. The Canadian and Australian companies said their projects will add about 425,000 ounces by 2016, worth $757 million at the Oct. 5 spot price, to the 16,000 ounces the country produced in 2011.

"There's clearly evidence that Greece has woken up to the potential of their mining industry," said Jeremy Wrathall, chairman of Perth-based Glory Resources. "Politicians increasingly realize that a pro-mining stance is appropriate due to job creation potential."

Greece, which is also fast-tracking state property sales, is set to overtake Finland as the continent's largest gold producer within four years, as regulators in Athens sign off on mines kept on hold for more than a decade by red tape and environmental rules. Finland, which mined 220,000 ounces last year, currently ranks 40th among the world's gold producers.

Greece was Europe's largest bauxite producer and the world's biggest supplier or perlite, used in insulation and as a soil replacement in horticulture, in 2010, according to the U.S. Geological Survey. Gold is currently the only metal targeted for fast-track approvals.

Eldorado Gold is leading the gold inflow. The Vancouver- based company gained three mines last year through its $2.4 billion acquisition of European Goldfields, trumping a rival offer from Qatar Holding, the country's sovereign wealth fund.

Eldorado is developing European Goldfields' Skouries and Olympias mines and the Perama Hill project that it already owned. The three sites will produce about 345,000 ounces by 2016, while Glory estimates its Sapes mine will have output of about 80,000 ounces a year.

That may be just the start. "We think Greece has the potential to be a major gold producer," said Wrathall. "It is bizarre that Greece is virtually unexplored because of the political situation that prevailed before the crisis. Modern exploration techniques have not been used in Greece at all."

Greece will account for about 21 percent of Eldorado's 2016 gold production of about 1.7 million ounces, according to BMO Capital Markets research. The company targets output of 660,000 ounces this year. Eldorado's Greek 2016 operations would generate revenue of more than $500 million a year at $1,500 an ounce, based on average forecasts compiled by Bloomberg.

Eldorado has doubled its workforce in the country to 800 since the takeover and plans to increase that to 1,500 when it's in full production. Glory Resources says it will employ about 200 when in production. Greece reported that 3.79 million people were employed in the second quarter with 1.17 million unemployed.

Eldorado says it will pay a tax rate of 20 percent in Greece, where there is presently no royalty in place. The company said it plans to pay about 1 percent of revenue to local communities until a royalty comes into effect.

Glory forecasts that it will pay about $80 million in taxes and $22 million in royalties during the current estimated life of project, based on a gold price of $1,200 an ounce. The discovery of more reserves would extend the life of the mine and the payment of royalties and taxes.

The Skouries and Olympias mines are in Central Macedonia, a region of Greece with 25.1 percent unemployment at the end of the second quarter. Eastern Macedonia and Thrace, site of the Perama Hill and Sapes mines, had a 24 percent jobless rate. Both are higher than the national average.

Greece, which reported 10,300 mining and quarrying jobs in the second quarter, is in its fifth year of recession. The economy is forecast to contract 6.9 percent this year, the same as in 2011, according to the Athens-based Foundation for Economic and Industrial Research. Since 2008, the number of jobless has more than tripled to a record, reaching a level of 23.6 percent.

Rising unemployment has led to government support for mining, according to Eldorado's Eduardo Moure, the company's vice president and general manager for Greece, and Sharpe, now CEO of Europa Resources Ltd.

In 2011 Greece implemented the "Fast Track" program to spur investment in projects that are of national importance, including gold mines. The environment ministry has speeded the issue of permits.

Greece is seeking 50 billion euros by 2020 selling state stakes in companies and real estate to meet the conditions of its bailout and cut debt. Last month the Hellenic Development Fund said a Lambda Development unit bid 81 million euros to lease the International Broadcasting Center in Athens for 90 years in the first real estate privatization under the plan.

"We noticed an enormous change in Greece in the time we were there driven by the financial crisis," said Sharpe. "With tourism falling and with the crisis they were collapsing into with the Euro they really had no choice."

Environmentalism and local opposition remains the biggest obstacle to gold mining in Greece, according to Sharpe. "There is a strong groundswell of opposition to those mines going ahead. These are not brownfield industrial sites, there is a clear choice between tourism and mining," said Sharpe. "They can just point to TVX and the mess they left. It's a very easy case to make."

Local villagers and mining protesters from Thessaloniki clashed with police at the Skouries site last month, according to local press reports.

Eldorado's Moure is betting more than $3 billion that objectors to expanding gold exploration in Greece will be swayed. The company intends to invest about $1 billion in the next five years.

"I think people realize we are part of the solution, that part of the economic recovery will be due to mining," said Moure. "I'm convinced that people who oppose our projects will come to realize that mining can be a positive force for change."

Arts & Entertainment
William Shakespeare's influence on English culture is still strongly felt today, from his plays on stage to words we use everyday
arts
Voices
voices Furore is yet another example of shameful Westminster evasion, says Nigel Farage
News
weird news... and film it, obviously
News
Matthew Mcnulty and Jessica Brown Findlay in 'Jamaica Inn'
mediaHundreds complain over dialogue levels in period drama
VIDEO
Have you tried new the Independent Digital Edition iPad app?
News
peopleJay Z and Beyoncé to buy £5.5m London townhouse
Voices
voicesMoyes' tragedy is one the Deputy PM understands all too well, says Matthew Norman
Arts & Entertainment
Rocker of ages: Chuck Berry
musicWhy do musicians play into old age?
News
peopleMan repeatedly tried to enter her homes in Los Angeles and London
Arts & Entertainment
With Jo Joyner in 'Trying Again'
tvHe talks to Alice Jones on swapping politics for pillow talk
News
Jilly's jewels: gardener Alan Titchmarsh
peopleCountry Life magazine's list of 'gallant' public figures throws light on what it means to be a gentleman in the modern world
Sport
John Terry goes down injured in the 70th minute
sportAtletico Madrid 0 Chelsea 0: Blues can finish the job at Stamford Bridge, but injuries to Terry and Cech are a concern for Mourinho
Student
student
News
<b>Rebecca Adlington</b>
<br />This, the first British swimmer to win two
Olympic gold medals in 100 years, is the eversmiling
face of the athletes who will, we're
confident, make us all proud at London 2012
peopleRebecca Adlington on 'nose surgery'
Arts & Entertainment
tvJudge for yourself
Life & Style
tech
News
Tough call: is the psychological distress Trott is suffering an illness? (Getty)
healthJonathan Trott and the problems of describing mental illness
Life & Style
23 April 2014: Google marks St George's Day with a drawing depicting England's patron saint slaying a fire-breathing dragon
tech
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Projects Financial Analyst - Global Technology firm

£55000 - £62000 per annum + outstanding benefits and bonus: Pro-Recruitment Gr...

Reception Teacher

£120 per day: Randstad Education Luton: Reception teacher required for an Outs...

Commercial B2B Pricing Specialist - Global Bids and Tenders

£35000 - £45000 per annum + excellent company benefits : Pro-Recruitment Group...

DT Teacher - Food Technology

£90 - £130 per day: Randstad Education Preston: The Job We are currently recr...

Day In a Page

Brits who migrate to Costa del Sol more unhappy than those who stay at home

It's not always fun in the sun: Moving abroad does not guarantee happiness

Brits who migrate to Costa del Sol more unhappy than those who stay at home
Migrants in Britain a decade on: They came, they worked, they stayed in Lincolnshire

Migrants in Britain a decade on

They came, they worked, they stayed in Lincolnshire
Chris Addison on swapping politics for pillow talk

Chris Addison on swapping politics for pillow talk

The 'Thick of It' favourite thinks the romcom is an 'awful genre'. So why is he happy with a starring role in Sky Living's new Lake District-set series 'Trying Again'?
Why musicians play into their old age

Why musicians play into their old age

Nick Hasted looks at how they are driven by a burning desire to keep on entertaining fans despite risking ridicule
How can you tell a gentleman?

How can you tell a gentleman?

A list of public figures with gallant attributes by Country Life magazine throws a fascinating light on what it means to be a gentleman in the modern world
Pet a porter: posh pet pampering

Pet a porter: posh pet pampering

The duo behind Asos and Achica have launched a new venture offering haute couture to help make furry companions fashionable
A History of the First World War in 100 moments: The mutiny that sent a ripple of fear through the Empire

A History of the First World War in 100 moments

The mutiny that sent a ripple of fear through the Empire
Hot stuff: 10 best kettles

Hot stuff: 10 best kettles

Celebrate St George’s Day with a nice cup of tea. Now you just need to get the water boiled
Sam Wallace: Why Giggs is perfect fit as Manchester United boss... in the longer term

Sam Wallace

Why Ryan Giggs is perfect fit as Manchester United boss... in the longer term
Renaud Lavillenie: The sky's the limit for this pole vaulter's ambitions

Renaud Lavillenie: The sky's the limit for this pole vaulter's ambitions

Having smashed Sergei Bubka's 21-year-old record, the French phenomenon tells Simon Turnbull he can go higher
Through the screen: British Pathé opens its archives

Through the screen

British Pathé opens its archives
The man behind the papier mâché mask

Frank Sidebottom

The man behind the papier mâché mask
Chris Marker: Mystic film-maker with a Midas touch

Mystic film-maker with a Midas touch

Chris Marker retrospective is a revelation
Boston runs again: Thousands take to the streets for marathon as city honours dead and injured of last year's bombing

Boston runs again

Thousands of runners take to the streets as city honours dead of last year
40 years of fostering and still holding the babies (and with no plans to retire)

40 years of fostering and holding the babies

In their seventies and still working as specialist foster parents