UPDATE 1-Greece halts activity at Canadian-run gold mine

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ATHENS, Aug 19 (Reuters) - Greece has suspended the mining
operations of Canada's Eldorado Gold ELD.TO in northern
Greece, saying the company violated contract terms, in a setback
to one of the top foreign investment projects in the country.
The $1 billion project is considered a test case for
Greece's ability to attract foreign investment to help revive
its economy, but has been beset by problems due to opposition by
local residents on environmental grounds.
Energy Minister Panos Skourletis said on Wednesday that the
project had been halted but could resume if the company fulfills
contract terms. The project includes gold mines already in
operation and two factories under construction that will enable
the company to process gold and other minerals in Greece rather
than overseas. Greece, which has just secured its third
international bailout, badly needs such projects to help
diversify its ailing economy.
"We are recalling our approval of the technical studies,
which will result in the halting of operations at Skouries and
part of operations in Olympiada," Skourletis told reporters
after meeting Prime Minister Alexis Tsipras. "The company has
violated some terms."
Vancouver-based Eldorado Gold Corp took over the project in
2012, promising to invest $1 billion over the next five years as
part of a plan to eventually source up to 30 percent of its
global gold production in Greece.
An energy ministry source said the government considered
Hellas Gold, Eldorado's Greek subsidiary, violated the terms of
its contract by failing to provide authorities with details on
its techniques which would make gold extraction safe.
Details of methods applied in Finland were supplied instead,
and were not accepted, the source said without elaborating.
Eldorado was not immediately available for comment.
The decision to halt operations is the latest twist in a
long-running saga over the project in Greece's Halkidiki region.
It has been dogged by controversy over the potential
environmental impact and faced uncertainty after the leftist
Syriza party of Prime Minister Alexis Tsipras came to power in
January as the party had sided with residents during its
election campaign.
In March the government revoked authorization to complete
the construction of a processing plant at the Skouries site.
Residents of the area have been opposed to the project for
years, fearing environmental damage. They have mounted repeated
legal appeals against the development, with two such petitions
rejected by Greece's highest court earlier this month.