September 21, 2017 / 10:56 AM / a year ago

UPDATE 2-Eldorado backs down on threat to halt Greek investment, for now

* Eldorado cites “constructive” talks with Greece

* But could still to halt investment if talks fail

* Athens seeks solution via arbitration. (Releads with Eldorado decision to postpone investment freeze)

By Angeliki Koutantou

ATHENS, Sept 21 (Reuters) - Eldorado Gold on Thursday postponed a decision to freeze its investment in Greece, saying that talks with the country’s leftist-led government, which granted it key permits last week, were “constructive”.

The Canadian miner last week threatened to halt new investment in its Olympias, Skouries and the Stratoni mines in the northern Greek region of Halkidiki from Sept. 22 unless the Greek government granted it permits and showed a willingness to engage in talks.

Eldorado also said it would only reassess its decision to freeze its investment if it got a permit for a flotation plant in Skouries.

Since then Athens has issued permits to allow Eldorado’s Olympias project to become fully operational and has also launched an arbitration process to settle a long-running dispute over a metallurgical plant in Madem Lakkos.

Eldorado’s Chief Executive Officer George Burns said in a statement that the company was “very pleased with the constructive dialogue that is underway” with the energy ministry following the issuance of more permits.

“As a result of these developments, we have decided to temporarily postpone our decision to place our assets in Halkidiki on care and maintenance,” he said.

But he warned that Eldorado could freeze the investment, if talks were unsuccessful:

“We preserve the right to place our assets on care and maintenance and to take prompt legal action to protect the company and its assets in Greece should our dialogue with the ministry ... prove unsuccessful.”

The energy ministry was not immediately available for comment.


Eldorado’s investment is one of the biggest in Greece and has long been viewed as a test of the country’s resolve to attract foreign capital.

But it has become a sensitive issue for Prime Minister Alexis Tsipras’s leftist party, which strongly opposed it before coming to power in 2015 but which has also promised to protect jobs. The government now says it wants the investment as long as it is economically and environmentally sound.

Hundreds of mine workers, fearing job losses, protested outside the energy ministry in Athens on Thursday, holding placards reading “YES to mines, NO to unemployment”.

The differences between Eldorado and the government have dragged on for years, mainly over environmental regulations.

In 2016, Eldorado froze part of the project but reversed this decision a few months later, after receiving another key permit.

The miner, which employs about 2,000 people in Greece, has spent nearly $3 billion since 2012 to purchase and develop the assets and may spend a further $3 billion if it fully develops them.

Eldorado blames Greece for long delays in issuing necessary permits. Athens has said the miner violates contractual obligations by submitting a deficient plan to build a metallurgical plant that will process ores mined in Skouries and Olympias.

Greece, which has been relying on an international bailout since 2010, also says Eldorado should produce gold and silver bars in the country. The issue will be discussed during the arbitration.

Burns said Eldorado remained confident that the arbitration process would be concluded “in a timely and efficient manner.” (Additional reporting by Alkis Konstantinidis and Lefteris Papadimas in Athens and Anirban Paul in Bengaluru; Editing by Renee Maltezou and Jane Merriman)

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