Spain’s mini gold rush beset by
concerns over development
By The Financial Times
Until recently, anyone looking for treasure in the
Spanish regions of Galicia and Asturias would have been directed to the sea:
the waters off the northwest tip of the country are renowned for prized
seafood.
However, interest – and controversy – has been
growing over the riches on dry land. Buried but apparently ripe for extraction
are some of the biggest untapped gold deposits in western Europe.
Edgewater Exploration and Astur Gold, two mining
companies based in Vancouver, have invested millions of dollars with the aim of
bringing these deposits into production. Edgewater acquired the rights to
produce gold at a site called Corcoesto in Galicia
in 2010, the same year that Astur Gold took control of the Salave deposit in Asturias.
Together, the sites contain more than 2m ounces of
gold, on a measured and indicated basis, but the amount that can be produced
profitably is likely to be much lower.
What drew the Canadian miners to the area were not
only promising geological findings but also the broader political climate in
Spain, which has been scarred by a deep recession and record
unemployment.
“One of our mandates was to find projects in the EU
where politicians wanted to say yes to jobs, in areas where jobs were
important,” said Cary Pinkowski, chief executive of Astur Gold.
Mr Pinkowski hopes to have final approval from the
regional government for the Salave project by the end of the year, and to ramp
up production at the site towards the end of 2015. He says his company has
received more than 11,000 applications for the 800 jobs Astur Gold hopes to
create during the construction phase. The mine itself will need 200-250
workers.
The two projects are part of a broader movement by
foreign investors seeking to turn Spain’s woes to their advantage and to find
an economy more ready to embrace otherwise controversial investments.
One prominent example is the Eurovegas
mega-casino, backed by Sheldon Adelson, the US billionaire, who has
lobbied the government to change local laws on smoking and other issues in
exchange for creating jobs.
Galicia and Asturias have unemployment rates above
20 per cent, so are as keen as the rest of Spain to attract employers.
However, Edgewater has discovered that employment
concerns do not always seal the deal. Having embraced the project at the start,
the Galicia government has backed away in recent months.
The company was told in July that it had to show it
had access to an additional €30m in funding before the project could proceed –
equivalent to a quarter of the total investment.
“They are killing the game for us,” said George
Salamis, president of Edgewater. “This has sent a shockwave through our
shareholder base and it impedes our ability to finance the project.”
Mr Salamis added: “The people of Galicia need this
project and they need it now.” Edgewater had received 15,000 applications for
the 270 jobs the company has promised to create. The mine enjoyed strong
backing from locals, but he conceded there was opposition from environmental
groups. This is also the case in Salave.
Alberto Núñez Feijóo, the Galician regional
president, said this month that the Corcoesto plan could not be approved in its
current form. He declared: “Every mining project has to be in strict compliance
with environmental laws, business laws and [those] that relate to industry and
technical feasibility.”
Mr Salamis still hopes that Edgewater will be able
to win over the authorities, possibly after bringing in other investors and
partners. For his company, however, much of the early enthusiasm over a mini
gold rush has started to fade.
“There is tremendous gold potential here,” he said.
“You can have the best deposit on the planet, but if the government doesn’t
support you, it’s basically worthless.”