A Greek economist’s terse sarcasm: “GDP has decreased by €47 billion in the last five years. Economy is expected to contract by 3.8% in 2013, the 6th straight year of recession! Unemployment has reached 24.7%. Youth unemployment... 55.4%! No worries though—we have the sun, the sea, our cultural background.”
And they have something else: GOLD.
Last year, the Canadian company Eldorado Gold Corp. shelled out $2.4 billion to acquire European Goldfields, which had been struggling for years to develop its Skouries and Olympias gold mines in Greece.Eldorado also owns the Perama Hill project. The three mines are expected to produce 345,000 ounces a year.
The Australian company Glory Resources Ltd. is developing its Sapes mine with an expected production of 80,000 ounces a year.
The four mines together would produce 425,000 ounces of gold by 2016, or about $750 million at today’s price—making Greece the largest gold producer in Europe.
Alas, development has been blocked for a decade by bureaucratic impossibilities, environmental groups, leftist political parties, and local residents—despite the manna of tax revenues, royalties, and jobs. Well, 1,700 jobs for 1.17 million unemployed.
But they’re just scratching the surface, so to speak. “We think Greece has the potential to be a major gold producer,” said Glory Chairman Jeremy Wrathall. He found it “bizarre” that the country was “virtually unexplored,” and he was full of hope that it had “woken up to the potential of the mining industry.”
Eduardo Moure, Eldorado’s general manager for Greece, had similar visions. “I think people realize we are part of the solution,” he said, convinced that they would “come to realize that mining can be a positive force for change.”
Operations are most advanced at Eldorado’s Olympias and Skouries mines in Halkidiki, a peninsula in Northern Greece marked by its three “fingers”—including Athos, whose Mount Athos is a world heritage site. Tourism is by far the largest industry and employer. And in July 2011, the Environment Ministry awarded the licenses to mine gold.
Tensions flared up in late March when protesters occupied the road leading to the Skouries quarry on Mount Kakkavos and scuffled with workers who were trying to get through. Then, in the nearby village of Ierissos, a municipal council meeting that had convened to discuss the project was broken up by protesters who overturned cars and fought street battles with riot police that had been brought in to keep things under control. A member of the protesting committee later told the paper Kathimerini, “A complete cessation of mining is the only action we are prepared to accept from the state.”
Local residence associations, cooperatives, and professional groups filed six appeals with the Council of State, Greece’s highest court, to stop further mining activity, arguing that it would destroy local forests and the ecosystem. On July 24, the court threw out the first appeal on the grounds that the investment would be “very beneficial for the economy.”
On August 6, riot police that had once again been brought in fired rubber bullets and teargas at protesters who marched from the village of Ierissos towards the Skouries mine, where workers had begun chopping down trees. On September 9, events took a nasty turn when protesters—some local, some bused in from Thessaloniki—tried to reach the mine. Police fired teargas. Protestors threw flares and Molotov cocktails. A number of fires broke out. People were injured. Police arrested several protestors and confiscated more than 50 firebombs.
The issue has split the community in two. Both sides brandish reports in support of their points of view. There are those who fear that mining will degrade the environment, ruin tourism and their livelihood, and leave behind, after the gold is depleted, untold damage. They’re worried that sodium cyanide will be used to extract the gold from the ore, which could contaminate the drinking water and the air. They’re backed by the left-wing SYRIZA, the Alternative Ecologists, the Green Ecologists, and other leftist groups.
And there are those, including many local minors, who see the economic benefits of the mines and believe that the environmental concerns are overblown. They say that new technologies won’t require cyanide to extract the gold. And Eldorado continues to emphasize that it adheres to all environmental and other regulations.
The whole debacle has laid bare one of the fundamental problems of Greece: utter lack of trust in its institutions. Nick Malkoutzis lamented “the murky way that public sector contracts have been handed out and the impunity enjoyed by companies that have violated all kinds of regulations. While the wealth and influence of this minority has grown, people’s confidence has withered.” And now, “every scheme tendered by the government” is greeted “with suspicion.” He called it “a social affliction brought on by years of graft.”
So, when an acquaintance of mine in Greece had dinner with an official at the Bank of Greece, the discussion inevitably came around to the Troika—and how Greece should send them packing. “Of course,” the central banker said, “it would help considerably if we actually had a functioning government these past 182 years.” Read.... Merkel Hides Behind The Troika Report, The Greeks Seethe, And The Drachma Beckons.
And here is SILVER: In July, Japan decided that utilities would be paid three times more for electricity from solar sources than from conventional sources. That premium will ignite the installation of solar panels—which use a lot of silver! Read.... The Solar Silver Thrust.
Please follow Business Insider on Twitter and Facebook.