TVX’s big fat Greek headache

Greece’s supreme administrative court, the Conseil d’Etat, has dealt TVX Gold (TVX-T) another blow by blocking the company’s Stratoni silver-lead-zinc operation, 65 km east of the Greek port of Thessaloniki, reports the Associated Press.

In a closed session, the court bowed to pressure from a local group that claims the operation poses environmental risks. The group says it is concerned the area’s water supplies might be polluted and that underground blasting at the mine would weaken buildings.

The court’s ruling will not be published until later this year, but court reporters were briefed on the decision.

Earlier this summer, the court rejected the local group’s request for an immediate suspension of activities at Stratoni. The request was made after mining and milling were suspended late last year on orders from a local mining inspector. Those restrictions were lifted on Feb. 15, 2002, when the Greek government issued a new mining permit. TVX received the permit after a team of six professors from the National Technical University of Athens found its proposed mining method to be both safe and appropriate, including drilling underneath the village of Stratoniki. The permit includes limitations on the amount of explosives that can be used.

The court has previously said TVX may or may not need to complete an environmental impact study to support existing permits allowing for the continuation of mining at Stratoni. TVX contends that a new study is required since Stratoni is an existing operation.

The court’s latest move casts a shadow over the future of TVX in Greece. The company was once one of the country’s largest foreign investors, yet TVX Chief Executive Officer Sean Harvey recently said he no long considers the company’s Greek operations to be part of its growth plan; at the time, he also noted that Stratoni had to remain profitable to survive.

Stratoni isn’t the only TVX operation to have suffered at the hands of Greek law. Earlier this year, the Conseil d’Etat annulled valid permits that had been granted by the Greek government to TVX for development of the nearby Olympias project. The annulment forced TVX to write down the carrying value of Olympias by US$200 million and record the charge in the fourth quarter of 2001.

TVX’s permitting woes in Greece stretch back to 1995, when it acquired the Hellenic gold complex, which includes the Madem Lakkos and Mavres Petres zinc-lead-silver mines and the nearby Stratoni mill.