Insight: Gold mine stirs hope and anger in shattered Greece – by Deepa Babington and Lefteris Papadimas (Reuters U.S. – January 13, 2014)

http://www.reuters.com/

OURANOUPOLI, Greece – (Reuters) – A Canadian quest to mine for gold in the lush forests of northern Greece is testing the government’s resolve to prove Europe’s most ravaged economy is open again for business.

The Skouries mine on Halkidiki peninsula – a landscape of pristine beaches and rolling hills dotted with olive groves – is among the biggest investments in Greece since it sank into a debt crisis four years ago.

But it has set Greece’s desperate need for finance to rebuild the economy against the interests of its vital tourism industry, and aroused anger on the peninsula – site of the famed Mount Athos monasteries – over the environmental cost.

Vancouver-based Eldorado Gold Corp took over the project in 2012, promising to invest $1 billion over the next five years as part of a plan to mine eventually source up to 30 percent of its global gold production in Greece. Yet preliminary work on the mine, which is supposed to open in 2016, has set off months of politicking and protests.

The row has overshadowed what was supposed to be the flagship project of the government’s foreign investment drive. It also highlights Greeks’ ambivalence about attempts by Prime Minister Antonis Samaras to kindle industrial growth in an economy that has traditionally relied on tourism and services.

Last year, intruders barged into the mine with hunting rifles, set equipment on fire and doused security guards with fuel, threatening to burn them alive.

Local protesters, who say they reject violence and have the backing of some opposition politicians in parliament, fear the mine will destroy Halkidiki’s tourist riches. Samaras, however, has warned that foreign investments would be protected at “any cost”.

“Rightly or wrongly, God endowed the region with ores, and we must first decide whether we (Greeks) want to exploit it or not,” said Petros Stratoudakis, CEO of the company developing the mine, Hellas Gold.

Eldorado owns 95 percent of Hellas Gold, which also has other mining projects in Halkidiki, with the rest held by Ellaktor, Greece’s biggest construction company.

MONEY SPINNER

Halkidiki has a rich history. The Eastern Orthodox monasteries nestled in the hills of Mount Athos are an artistic treasure and UNESCO World Heritage site.

But northern Greece has also long been fertile territory for explorers. Macedonian King Alexander the Great mined for gold in the hilly forests to finance his conquests into Asia 2,300 years ago, according to local authorities.

Eldorado executives say gold mining could become a significant money-spinner for modern-day Greece, bringing in foreign currency and helping to diversify an economy that is struggling with 27 percent unemployment.

“The conditions that exist particularly in northeast Greece are unique in my mind,” Eldorado CEO Paul Wright said in an interview. “I’ve been in the industry for 35 years and I’ve yet to see a situation where there is such a mineral endowment that is being recognized – in many cases quantified – but remains unutilized.”

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