Introduction
A Canadian company, TVX Gold Inc., won international attention in 1995 by winning a bid to develop a major project in Northern Greece. In November 1997, TVX received unwelcome attention when opposition from the village of Olympiada became violent.
The affair attracted some media attention, although the violence was rapidly quashed by heavy handed Greek riot police. Throughout Western Europe and North America, the story seemingly triggered the usual interpretations: That local people were trying to protect their homes and livelihoods from a rapacious and destructive polluter. Indeed, resource-sector companies are automatically assumed to be bad for the environment, so why pretend otherwise?
As a mining company would be reflexively given a place in the forces of darkness and evil, the media and general public invariably see protesters on the other side of the battle line. Because the unrest was rapidly quelled, the TVX vs. Olympiad story did not stay in the news long enough to become an issue. Yet it could flare up again, and this time the public in Europe and North America might pay attention.
However, assigning the white and black costumes to the usual sides might be an error. What is actually going on in northern Greece is too complex to be accurately described in a 300 word newspaper story or a 30 second film clip. In detail, the larger story might make one wonder whether every development vs. environment conflict is really so simple after all.
The Ground
The Halkidiki Prefecture is located in the eastern side of Macedonia, south-east of Thessaloniki. It is a complex peninsula with three long tendrils reaching further out to sea. One coarse description is to liken it to a goat’s udder dangling at the top of the Aegean.
The area is beautiful and has an ancient history (this is typical throughout Greece). Some parts are lush with wheat fields and mature forest. Others consist of dry scrub on rocky hills. Some parts, especially in the steep eastern hills, have become re-forested in recent centuries. The three sub-peninsulas consist of Kassandra in the west, Sithonia in the centre, and Athos in the east. This last peninsula is dominated by Mount Athos and is a Monastic Republic separate from Greece. Among other things, the 20 Orthodox Monasteries there admit few visitors and no women.
The spine of the main peninsula is a steep series of hills of 400 to 1200 metres in height. From Arnea and down to Stratoni, these fold into three or four generally parallel ridges with steep narrow gullies between them. The region was (and remains) lightly populated compared to other areas of Greece, and the hills have become heavily wooded. The hills are home to wild boar, fox, deer, and free range cattle that resemble the breeds portrayed in Classical Grecian art. Wolves have been recently reintroduced, over the objections of local farmers.
The real natural resources in these ridges, however, lie beneath the surface. Lead, silver, copper, iron and gold have been mined here on an occasional basis for some 2,500 years
Halkidiki boasts of one of the oldest Homo Erectus finds in Europe, and the region is known to be inhabited since Neolithic times. By the beginning of the Classical Era, the peninsula was colonized by settlers from Chalkis and other Euboean cities (hence the original name of Chalkisiki), although other colonists from Southern Greece soon followed. The region was densely populated by the standards of the time, but it also abutted the semi-civilized Hellenes of Ancient Macedonia.
In the 4th Century BC, the Macedonians conquered the Peninsula. They used its resources as a springboard for the capture of the rest of Greece, and then went on to the Persian Empire. It was during this period that Halkidiki’s most famous son was born. Aristotle is one of the world’s greatest philosophers and his work is still reflected in the way we think and conceptualize. He spent more of his time in Athens than his birthplace of Stageira but a public statue or bust of him is in many communities in the region.
In time, the Macedonian kingdom fell to Rome. The Roman Empire was perpetuated by Byzantium. Although Macedonia and its key city of Thessaloniki had to fend off Goths, Huns, Slavs, Franks, Venetians and Turks, Halkidiki stayed in Byzantine hands until the Turks finally conquered the region in the 15th Century. As the Ottoman Empire weakened in the early 19th Century, Greece in the region raised several revolts – all unsuccessful. While southern Greece became independent in 1827, Halkidiki was only incorporated into modern Greece after the 1912-13 Balkan War. History wasn’t finished with the region after 1913. The Bulgarians occupied the area as an Axis Ally in 1941-44, and guerrillas operated in the region during the 1944-49 civil war.
The depredations of history left eastern Halkidiki thinly populated by the beginning of this century. The inhabitants revolted several times in the 19th Century, and endured crushing poverty. In Ierissos, on the Tuesday after Easter, they still hold a slow solemn dance at the Black Threshing Floor to commemorate 400 people executed in the aftermath of one rising. This is an act of remembrance, not an entertainment. By 1912, there were really only 12 villages in the region – mostly in the fertile highlands away from the coast.
The Greek claim on Macedonia was not as secure as it could be. Bulgaria and Serbia (both proponents of a “Macedonian” identity apart form a Hellenic-derived one) had seized large parts of what had once been the ancient Kingdom of 2,200 years ago, and were eyeing the rest. To strengthen their hold on Macedonia, many Hellenic refugees from Turkey were resettled in the area. Halkidiki received its share, and many were placed in the unhealthy and under-populated coastal regions. In some cases, such as that of Olympiada, as many as a third of the new population died from malarial-related causes while building their new homes.
The eastern end of the hills are also pockmarked and scarred with the legacy of mining over the past 2,500 years. Here and there in the hills are old adits and shafts. The faces of the ridges have been scraped in places by larger mining operations (although roads have left scars too). A long steep valley below Stratoniki is littered with the debris left by the predecessors to TVX – rustling boilers and pipes, ruined buildings and old mine carts.
For those with a romantic infatuation with history, it is easy to recall that the mines in the area paid for Aristotle’s long education in Athens. They also provided the armour and pikes of the soldiers of Philip II and his son Alexander the Great. Coins made with metal from these mines may also have paid the masons who built the Hagia Sofia, lie buried as loot in Hun graves, bribed Vlad the Impaler, and twice dragged Turkish siege artillery to the gates of Vienna.
Modern mining seems less exotic somehow, but TVX spokesmen say the gold, silver and copper from the project will go to the athlete’s medals in the 2004 Olympic Games in Athens. Precious metals nowadays often ends up in circuit boards, dental cavities and fashionable jewellery. Yet at least some of it will still adorn those who make history and win glory.
The General Picture
Greece has had a difficult century. It is a small country (now about 10.5 million). The Ottoman Empire left it stranded and apart from the mainstream of European life – so it missed the Renaissance, the Reformation and the Enlightenment. It also began this century as an impoverished and under-developed nation.
Greece participated in the First and Second Balkan Wars of 1912-1913, the First World War, the 1919-1922 foray into Turkey, and the Second World War. These last two conflicts resulted in some 450,000 dead.
Beginning in the First World War, Greek internal politics polarized along liberal-Communist vs. royalist-Conservative lines. The nadir of this conflict came with the 1944-49 Civil War when Yugoslavia and Bulgaria backed Communist Guerrillas. Before they were quelled, the war took 90,000 lives. Greece is still wary of Turkey. As the Hellenic-Turkish rivalry goes back over a thousand years, the issues may be worth less than the grudge. Greece also has more recent differences with Bulgaria, Serbia and the Albanians. As a result, Greece still keeps a strong military posture.
After the civil war, internal political feuding continued – albeit much less violently. The Colonel’s Coup of 1967 resulted in a seven year junta, while elected governments have tended towards protectionism and socialist policies. Europe’s urban Marxist terrorist groups included the Greek November 17th Movement, and there still are a cluster of anarchist factions.
Because of these handicaps Greek economic performance lags far behind that found in Western Europe, despite the entry of the community in the EEC in 1981.
Another feature of Greek life has had a powerful effect on economic performance. Greeks weave strong private networks between families, friends and neighbours. Favours and opportunities are exchanged in a system that overlays all institutions. One Canadian working in Greece theorizes that this originated under Ottoman occupation, when people had to look out for themselves and limit their contacts with officialdom. There is much to recommend this system in small communities and private life – a person’s word and reputation has to be good, otherwise he becomes excluded from the patronage networks. The system also means that Greeks look after each other within the structure of family and community.
In public life, Greek patronage networks have been less healthy. The official way of doing things became slow and laborious, but the unofficial way is speedy and efficient. While overt corruption remained rare, the public sector became burdened with place-holders and jobseekers, while failing industries were often propped up to enhance local employment. The system also gave good protection to a few truly wealthy families, while limiting the growth of the middle classes. Moreover, the socialist and nationalist nature of Greek politics combined to place some 65% of the national economy under inefficient public ownership.
History and the weak post-war economy especially retarded development in rural areas. Lack of opportunity in the countryside lead to migration into Athens and, to a lesser extent, Thessaloniki and Patras. In Halkidiki, most young adults tend to leave and rarely return. The trend is worrisome, as Macedonia came under Athens’s control in 1912, and sovereignty was largely based on the ethnicity of the population. An empty countryside could reopen issues Greece wants permanently shut.
Finally, compared to its neighbours to the north and east, Greece is stable enough. While per capita GNP is less than that in most EU nations, it exceeds that of Albania, Bosnia, Bulgaria, FYROM (Tito’s “Macedonia”), Romania and Serbia. Even some Turkish economic migrants and refugees eye opportunities in Greece. Some residents from these neighbours have dragged trouble in with them. Crime rates are climbing, and a serious market in narcotics and firearms has developed.
The EU and the US would like to see a stable and prosperous Greece – even if only as an anchor to stabilize the region. At the same time, the inefficient state of the Greek economy has been a matter of some concern. Since 1981, Athens has been urged to bring its economy into line with other European nations. The national finances were characterized by a high debt, high inflation (outstripping real growth), and a large trade deficit that is only partly offset by tourism.
Greek governments of the 1990s have made earnest reforms. The 1990-93 conservative government of Konstantinos Mitsotaki’s New Democratic Party started the reform program. While Andreas Papandreou’s Socialist Party (PASOK) returned to power in 1993 on an anti-austerity campaign, his successor, Costas Simitis, reversed this direction in 1996. Currently the major parties are in accord over reforms. The public payroll has been cut, and austerity programs have begun. The parties have also agreed to try to keep their patronage networks out of the public sector.
Inflation fell from 22% in 1991 to 4.9% in 1997. The general government’s deficit as a share of GNP is expected to reach 3% in 1998, down from 14% in 1993. Bank deregulation is well in hand, and some 100 State-owned companies have been privatised so far. On the other hand, many citizens, especially in rural areas, are feeling the pinch, and sympathy for the government is at a low ebb.
Athens’ efforts have been rewarded by significant grants and investment from the EU. Major infrastructure programs are underway. The Hellenic Telecommunications Organization is being rapidly modernized and is extending its tendrils into the Balkans. Billions are being spent on modern high speed rail lines and highways, while Athens is bracing itself for the 2004 Summer Games.
Greece, long unresponsive to outside investors, is changing in this regard as well. Foreign capital and partners for new projects are urgently sought, with major EU and Greek grants and subsidies being dangled as bait. However, Athens prefers newcomers who will work in under-developed parts of the country, and who will substantially improve local conditions as a part of their project.
Athens and Thessaloniki, distinguished as they are by the remains of history, are unattractive in many other ways. There is a gritty feel to the air and many signs of neglect and carelessness. Their modern architecture is unremarkable. These appearances run counterpoint to the atmosphere of growing energy and expectation. Greece is poised for a period of long and rapid growth – and the effects of centuries of neglect and decades of unrest may be soon sloughed off.
The Mines of Halkidiki
One clear example of the Greek future lies with the new gold mining project in Halkidiki. In fact, it represents the largest private investment in Greece. It also appears to be an elegant example of the solutions Greece needs to solve many of its problems.
Until recently, the mines in the area were owned by Hellenic Chemical and Fertilizers. The Kassandra mine was begun just up the valley from Olympiada. The old Madem Lakkos works had been active in the 1920s (under a French company) and were re-opened by Hellenic Chemicals in the 1950s.
Madem Lakkos produced lead/silver and zinc concentrates, while Kassandra yielded arsenopyrite that held lead, zinc, silver and gold (as well as sulphur, arsenic and porphyry). As much of the gold is encased in sulphides, recovery was difficult. Another deposit of gold/copper ore at Skouries, 20 km southwest of Kassandra, was investigated by various parties in the past who only scratched the surface. More recent explorations found high grade ore beginning around 350 metres deep.
The old mines were not efficient. The Kassandra mine only brought up 700 tons of ore a day, and old fashioned extraction methods produced much lead and zinc, but little gold. Hellenic Fertilizers had to liquidate their holdings in 1991. Faced with the loss of 1,000 jobs in an under developed area with 30% unemployment, the Greek government stepped in. The National Bank of Greece kept the mines operating from 1992 onwards for some $25,000,000 a year. This was not tenable for a government that had to get its finances in order.
The other legacy of Hellenic Fertilizers was a very sloppy approach to the environment. In Stratoni, tailings from Madem Lakkos were dumped into the sea along the town front. It was not uncommon for bathers to turn up with blackened skin from a quick dip. Two creeks used to flow through cracks caused by subsidence into the mine, and emerged contaminated with sulphur and lead. The tailings ponds were inadequate and apparently leaked. Up the ravine, erosion near Stratoniki was threatening to swallow up some houses and presented a hazard to livestock.
While Hellenic Fertilizer’s tailings ponds at Kassandra seemed secure enough, they were not well sited and lurk about four kilometres up the valley from Olympiada. Actually, water in these ponds is not overly toxic. A former top foreman with the mine used to drink water from it in front of visitors to demonstrate how safe it was – more on him anon. Worse, a large unprocessed heap of arsenopyrite ore was left exposed to the elements and leaching toxic minerals into the valley. The untidiness that characterized Madem Lakkos was present at Kassandra. Waste oil products and trash from both mines used to be dumped directly into a nearby water course.
The picture seemed clear in Athens: Find someone to buy the mines, clean-up the environment, lower unemployment – and help modernize Greek mining by importing new technologies and methods.
In 1992, the first international bidding process was opened. There were no takers in whom Athens was interested. The same thing happened the next year. In December 1994, the third bidding process opened up, and TVX was among the respondents. By March 1995, it was nominated as the preferred bidder.
An agreement was signed in December 1995 by the Greek government and TVX. Parliament ratified it in July of 1996. This was an important event. TVX was the largest single foreign investment in modern Greece. The project was also conditional on an audit of the size of the lode – a process that is now almost complete and seems to have TVX in a buoyant mood. The company first talked of being in the area for only seven years, now it may be there for 20 years … or more.
The confidence of the government and opposition parties in TVX was striking. Of 300 members of Parliament, 97% voted for the deal. Only the Communist Party abstained. Impassioned political discourse is a leading hobby in Greece, and this concord is rare. Athens was, and remains, pleased with the bargain it struck. This solution to so many local problems may have been welcome in Athens, and the Halkidiki Prefecture, but the village of Olympiada was preparing to rain on the parade.
The TVX Project
TVX Gold Inc. is based in Toronto. It is in business to earn money for its investors and shareholders by producing and selling precious metals. Given the long slump of gold prices at around $300 an ounce, the company has concentrated on mines where inexpensive production is possible.
Despite its low cost strategy, TVX is not insensitive to responsibility. As one executive in Athens observed, “You can’t be there to grab the money and run.” Daniel Trivelli, the Chilean chief operating officer for TVX in Stratoni, put the company’s philosophy in succinct terms. “International companies must pay attention to the environment – be environmentally sound. Having good relations with the community is a must. It’s a part of the structure. If you don’t operate this way, it’s the last business that you’ll do.” Cynics about major corporations might be shocked. Trivelli’s words are the way that the company operates.
Like many modern resource-based companies, TVX knows that high safety standards, good community relations, and care for the environment are sound practices. Given the company’s drive to produce precious metals cheaply, they understand the adage that an ounce of prevention is worth a pound of cure. This makes sense as mining companies must take a long view. Some projects go on for decades. Also, a highly specialized work force cannot be assembled overnight. Moreover, with today’s media and international non-government watchdogs, behaving badly in one country will sour chances of starting operations in another. TVX is not altruistic, but is very pragmatic.
TVX is an international company, with active mines in northern Chile, Goias and Minas Gerais States in Brazil, Ontario and Manitoba. It is exploring new projects in Brazil, the Kamchatka Peninsula and in the Czech Republic. According to their annual report, slumping company profits in 1996-97 are being arrested with the deactivation of two other mines. Production costs of gold will shrink from $238 per ounce in 1996, to an estimated $200 in 1998.
The Greek government’s requirements for environmental and community responsibility included:
- That the project be profitable;
- That the project employ at least 550 workers.
- The rehabilitation and protection of the environment.
- Support for local community and cultural development.
TVX appears to be honouring these conditions. They bought the 312 square kilometre project area for some $48 million. With $69 million in grants from Athens, the Company’s investment costs of some $180 million will be offset before production starts. This is in addition to the $460 million it will need to get two mines in working order.
The project involves modernizing Kassandra (an underground mine) and developing Skouries as a combined open-pit/underground mine. Madem Lakkos will stay open until Kassandra and Skouries are operating. This offsets the investment costs, and keeps the workers busy while training them in current production and safety techniques.
Skouries (an old Greek term for slag heap – with which the area is dotted) has high grade ores for copper and gold. The company expects to extract 25,000 tons of ore per day and anticipate producing at least 4-6 million ounces of gold, as well as copper, over 16-24 years. The site should begin production in 2001.
While ore from Skouries can be processed conventionally, a new process will turn Kassandra into a lucrative project. Its arsenopyrite ores can be more efficiently (and safely) processed with a new bio-oxidation process. This will allow the company to produce gold for some $150 per ounce – once credits for silver, lead and zinc are taken into account. Kassandra is expected to produce at least 3 million ounces of gold and 40.5 million of silver over 13 years once production begins. The company expects to shift 25,000 tons of ore per day.
The company’s environmental staff in Stratoni are eager to display their rehabilitation projects – so far mostly in the area around Stratoni and Stratoniki. They flipped the tailings pond for Madem Lakkos, capped off ore stockpiles and re-routed the water courses that drained into the mine. Stratoni has a decent waterfront again, and many local eyesores have been cleaned up.
According to Stelios Samaras, a company communications officer, all of the project sites now have water and oil-product management systems. Where water and oil once was flushed into the local creeks, under TVX it is now captured and treated. Rubbish from the mines is no longer thrown into the creeks either. Safety standards have been increased. Among other things, Greece has its first hard-rock mine rescue team.
According to Samaras and Trivelli, once theKassandra mill site is selected, the company can honour another part of its commitment. The ore stockpile near the mill will be processed, and the contents of the tailings ponds will be reprocessed as well. Once this is done, the remaining rock will be mixed with cement and used as back-fill in the mine. Most of the tailings and waste rock generated by the new project will be treated this way.
The old Hellenic Fertilizer tailings pond is to be reclaimed and planted with trees. TVX intends to build a new pond back in the hills. Unlike the existing pond, it will be built to EU standards. The bio-oxidation process will have to be augmented with other recovery methods. This includes the use of cyanide in a chemical wash, but it is to be recovered and reused.
Samaras points out that money has been spent on a number of community projects – mostly concerned with the schools, local buses, and cultural activities. Although expected to employ 550 workers, currently the company has between 800 and 850 local workers. More may be hired. Especially since production hasn’t begun yet and the full extent of resources in the area remains unknown. Vasilis Alvanos and George Cliniadak are miners with over 30 years of experience each. One is the president of the Technicians Union local, the other of the Surface Employees. Both are content with the management of the mine and support the entire project. According to Alvanos “We have good relations with the company. We discuss a problem with them, and it gets addressed.” Cliniadakis strongly appreciated the modernization and safety programs, but observed “We will always be trying for better remuneration.”
Other employees are equally content with the company. Most of the residents of the area have seen that the company keeps its word, and are less anxious about the delivery of its promises.
On the negative side, some things deserve comment. At a mining company, TVX officials, naturally, think like hard rock miners. Problems are obstacles to be broken through, not worked around. While the company’s work has been exemplary so far, it still has a long way to go to win the “hearts and minds” of most of the 25,000 citizens of the area.
Hard rock men play hard games. The local opposition might be stubborn, but it is a mistake to underestimate the company. TVX has been nice, and has played by the book, but their patience is finite. The company (like the Greek government) is determined that the project will go ahead, and that it will go ahead their way.
Big Trouble in Tiny Town
Olympiada is a village of some 700 souls. It is alone in a cozy valley amid the forested hills, and is nestled around a tidy harbour. The horizon is always close here. Even if one looks out to sea, the eye is immediately captured by iKaprosi Island, and it seldom looks further.
It was built by Greek refugees from Asia Minor in 1923. The sea gives a living to some families (local mussels are quite good), and charcoal burning is the main trade for one of the town’s leading families. Otherwise, opportunities in the town were limited until the opening of Kassandra. Dozens of villiagers worked in the mine, and some still do.
The Kassandra Mine is up the valley, as are its mill sites and tailing ponds. The other major feature in the valley lies at its southern entrance. The ancient ruins of Stageira are confined to a small ithmus. It was founded in 655 BC and played a minor role in the Classical era. Its main claim to fame is as the birthplace of Aristotle. During his lifetime, the city was destroyed by Philip II of Macedonia. The king had the city partly rebuilt as a gesture to Aristotle for tutoring his son Alexander. However, the city never recovered. Later, the site was a fortified Byzantine settlement, but this too passed on.
Local tradition also has it that iKaprosi Island was the place of exile for Olympias, the libertine mother of Alexander. Further up the valley, near the tailing ponds, lie the undefined ruins of a more ancient community. This conglomeration of ruins is nothing special for Greece. Virtually every town is built upon or near the ruins of many others.
In the confines of the valley, the rest of the world seems far away, and everything is vested with special meaning. Among the other villages from Arnea down to Ouranoupoli (the gateway to the Mount Athos Peninsula), villagers seem more open – their vistas are further and their communities are larger.
In the confines of the valley, the rest of the world seems far away, and everything is vested with special meaning. Among the other villages from Arnea down to Ouranoupoli (the agteway to the Mount Athos Peninsula), villagers seem more open- their vistas are further and their communities are larger. By contrast, Olympiada seems to be a breed apart. This is not to imply the villagers are inbred, clannish or isolated- none of these words apply. Rather, the closeness of their landscape implies a closeness of spirit and narrower community feelings.
Opposition to the re-opening of the mine project began almost as soon as the bidding process began. Companies that submitted bids received letters from Olympiada advising them that the project would not be free of trouble.
TVX’s activities in the valley ran into difficulties in March 1996. A roadblock on the main route to the mine and the mill sites was set up, and interfered with deliveries of supplies and equipment. Despite strong support for TVX from the government and non-governmental associations, minor incidents of sabotage and harassment continued throughout the year. In October 1996, TVX threatened to quit the project. Riot police tlien moved in after stones were hurled at a company truck. Eight protesters were arrested.
