(Adds details, background)
Aug 20 (Reuters) - Canadian miner Eldorado Gold Corp said on Thursday it would suspend all mining and development activities in the Halkidiki region in Greece after the Greek Energy Ministry on Wednesday revoked approvals for technical studies in the region.
Eldorado said its Greek arm, Hellas Gold SA, is taking legal action against the ministry’s decision, including the filing of an injunction request before the Greek Supreme Court.
The company said it completed tests for the Olympias project at a smelting facility in Finland, but the Energy Ministry contended the tests should have been done at site in Halkidiki, and revoked approvals to perform technical studies.
The tests in Finland were part of technical studies that formed the basis of other permits needed to develop the Skouries and Olympias projects, Eldorado said.
Eldorado said it would be forced to suspend the majority of the 2,000 people it employs directly or through contractors in Halkidiki for up to three months and would have to lay them off if its permits were not reinstated.
The project in Greece’s Halkidiki region includes gold mines in operation and two factories under construction that will enable the company to process gold and other minerals in Greece.
The suspension, effective from next week, would affect Hellas Gold’s Stratoni mine as well as projects in Skouries and Olympias.
“Eldorado cannot and will not continue to allocate expenditures to our projects in Greece while the Ministry of Energy is openly hostile to our activities,” the company’s Chief Executive Paul Wright said.
The $1 billion project is considered a test case for Greece’s ability to attract foreign investment to help revive its economy, but it has been beset by problems due to opposition by local residents on environmental grounds.
Eldorado took over the project in 2012, promising to invest $1 billion over the five years as part of a plan to eventually source up to 30 percent of its global gold production in Greece.
Reporting by Ramkumar Iyer in Bengaluru; Editing by Ken Wills