Eldorado Gold could be subject to arbitration in Greece

David McHutchon | May 30, 2017 | Views: 472

Gold producer Eldorado Gold could be subject to arbitration after the Greek government last month announced its intention to take the company to mediation over a possible breach of contract relating to its ability to produce precious metals in Greece, said miningweekly.com.

The Greek government on April 11 assigned a law firm to represent it before arbitration court over whether Eldorado is actually able to fulfil its contractual obligation to produce precious metals in the country, after the Environment Ministry rejected a technical study regarding the metallurgy associated with its development projects.

According to nongovernmental organisation MiningWatch Canada, this Ministerial decision, which puts in jeopardy Eldorado’s “entire” investment plan, can only be overturned by Greece’s highest administrative court. Eldorado filed an appeal on December 28; however, no date has been set for the case to be heard.

Eldorado acquired certain Greek assets early in 2012 through its $2.5-billion merger with European Goldfields. Subsidiary Hellas Gold chose to employ the ‘flash smelting’ pyrometallurgical technology, developed by the Finnish company Outotec, to process ores produced by its mines.

According to information supplied by MiningWatch, the Greek authorities approved this technology on environmental grounds in 2011 and defined its use as a “necessary precondition” for the whole project. However, five years on, Hellas and Outotec are yet to demonstrate that flash smelting could be successfully applied under the conditions and design parameters specified in the environmental study.

This resulted in the rejection of the technical plan for the copper/gold metallurgical unit by the Environment Ministry on July 5, 2016. A remedy petition filed by Hellas in September was met again with a final rejection on November 2.

The Ministry’s technical authority noted as early as 2010 that, owing to the high concentration of arsenic in the ore from Halkidiki, Hellas was proposing a non-standard application of flash smelting that raised questions as to its applicability. Six years on, the Ministry of Environment concluded that, in the case of these particular high-arsenic ores, flash smelting would generate extremely large volumes of toxic off-gasses and cause multiple technical issues in downstream processing, placing Eldorado at an impasse, technically and legally.

MiningWatch contends that the technology on which the entire investment plan is dependent is “simply not applicable for technical and environmental reasons, yet under the terms of its environmental approval Eldorado cannot opt for a different technology”.

Eldorado responded to a request for comment, stating it has not received formal written notice of any arbitration from the Greek government.

“A formal notice would include the reason for triggering the arbitration so we have no further detail at this point. We will keep our stakeholders informed of any issues deemed to be material,” a spokesperson said in a statement to Mining Weekly Online on Monday.

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