EC orders mine repayment

Finance

Publishing Date: 24 Feb 2011 2:29pm GMT
Author: Mining Journal

A Canadian-owned Greek mining company will have to pay €15.3 million (US$21 million), plus interest, to the Greek government, after the European Commission decided it had been privatised too cheaply.

Brussels has ruled that Ellinikos Xrysos SA paid too little when it bought gold, copper, zinc, lead and silver mines in the Kassandra area of northern Greece. As a result, the purchase was a "disguised subsidy", and so falls foul of the European Union's rules on state aid (which prevent national governments giving their companies an unfair advantage).

In a statement, the Commission said the sale of Kassandra Mines, in 2003, to Ellinikos Xrysos was "below its real market value and, therefore, involved subsidies which violated EU state aid rules".

Brussels said a report, commissioned for Ellinikos Xrysos shortly after the sale, valued the mines at €25 million, but it paid €14 million less (and also did not pay due taxes on the sale, amounting to €1.34 million).

As a result, the company, now owned by Canada’s European Goldfields Ltd (EGL), will have to repay what is, in effect, illegal state aid.

The full article is in this week's Mining Journal.