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What next for Greece?

By Siobhan Lismore-Scott
Published: Friday, 30 January 2015

It is too early to tell what the impact of Greece’s new government will be on the mining sector. But the new leftist government raises interesting questions about the relationship the country will have with the rest of Europe and time will tell if any of the anti-austerity measures will extend to the extractive sector.

News that Greece had voted in a far left government earlier this week sent ripples through global markets, including commodity and mining indexes.

The election of the first anti-austerity government in Europe has not only shaken up the industry but also the political spectrum. With this shift in government towards Alexis Tsipras’ Syriza’s left, the country has firmly pitched itself against what Tsipras calls the "troika" of institutions — the European Commission, The European Central Bank and the IMF.

While it is too early to judge what the implications may be for the county's extractive sector, the Syriza party has made some salient points around the subject of foreign investment in the country and the impact of the new Prime Minister being sworn in sent gold and copper stocks on some exchanges heading south. The Johannesburg Stock Exchange reported a slump in South African mining stocks following the election news, while European indices climbed higher.

"We (...) expect that the Greek government will recognise that the mining sector, although not so extensive, is a dynamic, innovative, export oriented and technologically advanced sector with highly skilled and trained employees, with noticeably above average salaries and long-term job security," Dimitris Kalogeropoulos, corporate strategy manager for Grecian Magnesite told IM.

"Many had expected the Greek election to unleash chaos on markets, but with the European Central Bank having launched quantitative easing and the impact of the new government in Athens being so difficult to quantify, it looks as if the default setting in Europe remains "buy on the dips"," Chris Beauchamp, market analyst at IG, said, following the elections.

"The problem with the Greek elections, which did not apply to the European Central Bank decision, is that the consequences are so unclear," Beauchamp added.

In terms of a government, Tsipras has said he will shrink his cabinet from 20 members to 10. The final line up is made up of leftwing academics with very little political experience.

"This is likely to raise some fears among foreign investors that Athens may pull back on economic reforms, attack big business interests and take a hard line on renegotiating Greece’s debt burden," the London Financial Times wrote in an opinion column.

The appointment in the streamlined cabinet of a Transparency Minister, Panayotis Nicoloudis, signifies that Tsipras is serious about cracking down on corruption and tax evasion. The appointment of Yanis Varoufakis, an Athens university professor and blogger, as finance minister could also put the wider finance communities’ heckles up.

Alexis Tsipras Greece_Flickr_ Mirko Isaia  Mining in Greece

Pannayotis Lafazanis, a leftist hardliner, is in charge of environment, industry and energy, which presumably means that mining will fall under his remit.

The mineral industry in Greece is regulated by the Mining Code, Legislative Decree 210/1973, as amended by a number of laws and ordinances on technical and procedural issues. It is also subject to EU regulation such as the Environmental Impact Directive and the EU Mining Waste Directive. And there is no reason to suggest this will change.

Where will Alexis Tsipras and and his Syriza party take Greece and it's mining industry?
SOURCE: Mirko Isaia

Geological exploration has been carried out by domestic companies, or by the Institute of Geology and Mining Exploration Management (IGMEM).

Industrial minerals in Greece

In terms of industrial minerals, Greece is the world’s second ranked bentonite producer after the US, with S&B producing on Milos Island. Now the company is owned by Imerys, the world’s largest industrial minerals miner, but it was previously owned by the Kyriacopoulos family (61%) and the New York-based private equity firm, Rhone Capital (39%). The company also produces wollastonite and perlite.

Grecian Magnesite produces caustic calcined magnesia (CCM) and dead burned magnesia (DBM) with a combined capacity of 420 tpd. It produces more than 50 different grades of DBM and CCM as well as monolithic refractories.

The company is proud that it has kept its workforce intact throughout the financial crisis without any reductions in salaries and benefits. And, despite Greece being at its lowest point, economically, over the last three years, the company has continued to invest both at home and abroad and is in the process of strengthening its production and commercial networks.

"Based on the announcements of the new government, regarding the reconstruction of the economy – transformation and upgrading of the country’s "productive" system and recourses – we expect greater interest and understanding of the value/contribution of industrial minerals in the economic recovery such as in employment and exports," Kalogeropoulos told IM.

"Too much attention has been directed to the "far away" hope of developing the production of oil and natural gas," he added.

Grecian Magnesite also expects that further investment in employment, export, investment and research and development (R&D) incentives will take place, as well as much-needed improvements in infrastructure , including those to ports and railways.