Canadian miner and Greek minister clash over projects

Eldorado Gold was making steady progress with a €1bn project to extract copper, gold and other minerals in the Halkidiki region of northern Greece, known since ancient times for its rich ore deposits.

Then the Canadian mining company came up against Panayotis Lafazanis, Greece's new minister for productive recovery, energy and the environment.

Once a favoured investor that promised to bring thousands of jobs, the company has found its projects stymied by Athens, showing how much harder life has become for many businesses under the radical left Syriza government.

Since his appointment in January, Mr Lafazanis has focused on reversing pro-market policies agreed between Greece and its international lenders, hampering Athens' attempts to unlock urgently needed bailout money.

He has cancelled the planned privatisation of state-controlled electricity assets, reassuring trade unions at the power company that it will remain a near-monopoly and made clear to foreign investors preparing final bids for the national grid that the sale will not take place.

Mr Lafazanis has even risked the wrath of European partners by cosying up to Moscow and making a preliminary deal with Gazprom on a bilateral energy package. If formalised, the agreement would include cuts in gas prices and an invitation to Russian companies to bid for offshore oil and gas exploration rights in Greece.

As leader of Left Platform, Syriza's hardline faction, Mr Lafazanis enjoys a special authority that Alexis Tsipras, the prime minister, is reluctant to challenge for fear of splitting the party.

True to his ideological past as a senior official in the Greek communist party, he maintains that private companies should be excluded from developing the country's natural resources.

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"We are 100 per cent against it [the Eldorado project] and we will use all possible legal means to stop it," Mr Lafazanis said when he took office.

"We're going to review fully the permitting process to ascertain whether everything was done legally, especially by the local authorities," he added. Mr Lafazanis could not be contacted for comment.

His ministry has since revoked Eldorado's permit to fell trees in one area of the concession, along with an approval for a building to house an ore-grinding facility at Skouries, where an open-pit mine is due to begin extracting gold-bearing copper ore next year. Without a building, the facility cannot operate, says Paul Wright, Eldorado's chief executive.

Mr Wright insists the company's Greek subsidiary, Hellas Gold, obtained all its permits and licences through correct procedures.

"We continue to fulfil our legal obligations as an investor with the contract with the Greek state. However, presently, unfortunately, the government is failing to fulfil all of its obligations, to the detriment of the investment," he said.

Eldorado's predicament is in sharp contrast with its previous status of "flagship investor", a rare success story for the previous centre-right government of Antonis Samaras and its drive to attract investment to pull Greece out of a crippling recession.

The Halkidiki venture was fast-tracked through the Greek bureaucratic maze as a priority project that would eventually create 4,000 jobs in a depressed rural area with an unemployment rate close to 35 per cent.

Eldorado's geological studies hold a promise of further exploitable gold deposits in a region that 2,300 years ago produced enough wealth to finance king Alexander the Great's military expedition to conquer Persia.

"Halkidiki could have a thriving, large mining industry based on deposits already identified, and there are good opportunities to find more deposits in the region that could be developed," Mr Wright said.

Mr Lafazanis's opposition to the project is not shared by the majority of local residents, many of whom work for the company. Eldorado's trade union bosses visited him in Athens to plead the company's case. A group of woodcutters facing redundancy after the tree-cutting permit was withdrawn recently picketed his ministry.

"Families moved back to our village and others round here when the Canadians began the mining development. The place has come back to life . . . It would be a disaster for us if the government stops the project," said Yannis Markoyannis, mayor of the village of Stratoniki.

But the villagers' vision of prosperity is rubbished by anti-mining activists, who argue that Eldorado's project will pollute local water sources, destroy the livelihoods of local woodcutters, beekeepers and livestock farmers and ruin the region's potential for developing tourism.

Protests against the Skouries project turned violent in 2013 when masked activists broke into the site, set fire to vehicles and machinery and threw petrol over three security guards, threatening to burn them alive. Police staged a pre-dawn raid on the village of Lerissos, the centre of the protests; several residents still face charges related to the incident.

Katerina Igglesi, a prominent anti-mining activist and now a Syriza MP, says: "We should be doing soft tourism in Halkidiki, not allowing foreign companies to exploit our mineral wealth and ruin the environment."

Work at Skouries is continuing for the moment, but the project is likely to be mothballed - with the loss of 2,000 jobs - unless Mr Lafazanis changes his mind.

"No investor can be expected to continue to make a significant investment in a country where the expressed attitude and actions of the responsible ministry are openly hostile to the investment,' Mr Wright warned.

"While remaining optimistic that through ongoing engagement attitudes can be made more constructive, it is prudent for us to be prepared to execute our contingency plans."

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