Business

Greek government halts production at Canadian-owned gold mine

Shares of Eldorado Gold slid Wednesday after the Greek government temporarily halted activity at some of the company's operations in northern Greece.

Relations between Vancouver-based Eldorado and the leftist Greek government have been testy

More than 10,000 people took to the streets of Thessaloniki, Greece, on March 9, 2013, to protest against a planned gold mine operation by Eldorado Gold Corp. that they said would damage the environment. (Nikolas Giakoumidis/Associated Press)

Shares of Eldorado Gold slid Wednesday after the Greek government temporarily halted activity at some of the company's operations in northern Greece.

Greek Energy Minister Panos Skourletis as saying Eldorado had "violated some terms." He provided no elaboration.

"We are recalling the technical studies, which will result in the halting of operations at Skouries and part of operations in Olympiada," Skourletis said, referring to two of the company's mine sites.

According to the Associated Press, documents released by the ministry say the violations concern a project to build a copper and gold processing plant, including not carrying out certain tests on the flash smelting process proposed for use. According to the decision, the suspension will be lifted if the company resubmits the necessary documentation and meets the requirements within a year.

"We are most disappointed and perplexed by this entirely inappropriate decision of the Ministry of Energy, which puts 5,000 direct and indirect jobs in Greece at risk," said Eldorado CEO Paul Wright in a statement. Wright said the company would challenge the ministry's suspension in court and warned that its Greek subsidiary "may have to suspend all its mining and development activities" in northern Greece due to what he called "this rash decision by the Ministry of Energy."

Eldorado shares closed down 39 cents at $5.07 in heavy TSX trading. The shares had dipped as low as $4.71 in the morning. Its NYSE-listed shares also lost about 7 per cent.

Long-running squabble

Relations between Vancouver-based Eldorado and the leftist Greek government have been testy. The governing Syriza party has tangled with the company before on environmental and financial grounds. In March, the government blocked construction of a processing plant at Eldorado's Skouries mine. 

Thousands of people have turned out on several occasions over the past two years to protest the company's mining plans. The project in Skouries, in particular, has been divisive from the start, with communities and environmentalists saying it threatens the forest of Halkidiki and water quality in a natural area.

The company's mining activities provide several thousand jobs in an economy that is reeling from a serious financial crisis. But the government said much-needed economic development can't come at the expense of the environment.

"For the government, investments are welcome, they are necessary, essential, but the companies must also respect the terms to which they have committed so as not to harm the public interest and the environment," Skourletis told reporters.

Just last week, Eldorado said a Greek court had issued two decisions that "confirm once more the legality of our activities in northern Greece." 

    

With files from Reuters and The Associated Press

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