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Greece and Raw MaterialsCurrent status, issues, and prospects
Athanasios KefalasPresident, Greek Mining Enterprises Association
Athens, November 23, 2016
2
The Greek land houses a wide portfolio of minerals with countless uses in industry and daily life
Lignite2nd in the EU, 5th worldwide
LateriteOne of the largest
producers in Europe
MarbleGlobal leader in quality, acquiring market share
MagnesiteLargest exporter
in Europe
BauxiteKey for the national aluminum industry
Bentonite1st in Europe, 2nd worldwide
Perlite1st worldwide
AggregatesKey for the
cement industry and construction
Gypsum / PozzolanKey for the
cement industry
3
A plethora of minerals in several locations – metallic and lignite mines as well as industrial minerals (1/2)
4
A plethora of minerals in several locations – marble and aggregates (2/2)
5
In other words…
Mineral resource centered activity has traditionally been a key driver
of economic development, employment (in urban centers but mainly in the periphery), trade, and ultimately competitive advantage
for the Greek economy
6
Today, the Greek mining industry continues to thrive
The Greek mining industry at-a-glance:
Accounts for 3.4% of the Greek GDP
Comprises of more than 25 large mining
companies that are active in Greece and
abroad
Extracts over 30 different minerals,
10 of which in quantities larger than
300,000 tons per year
Generated a total value of €2.3 billion in
2014, roughly 50% of which was exported
Constitutes almost 5% of total Greek
exports
Employs directly roughly 20,000 individuals
and indirectly 80,000 individuals
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27
67
118
0
20
40
60
80
100
120
140
Direct Indirect Induced Total
thou
sand
s of
full
time
equi
vale
nt jo
bs
Wider impact on employment
7
The mining industry is a large contributor to the national economy both compared to other EU countries and other industries domestically
0,4 0,5 0,5 0,6 0,7 0,8 0,9 1,1 1,1 1,2 1,4 1,5 1,6 1,7 1,8 2,2 2,2 2,3 2,3 2,4 2,5
2,9 3,1
7,0 7,1
10,1 13,8
0 5 10 15
BelgiumRomaniaGermanyHungary
ItalyFrance
DenmarkLithuania
LuxembourgIrelandCyprus
SloveniaSpain
FinlandSlovakia
AustriaPortugal
Czech RepublicNetherlands
United KingdomSwedenGreece
LatviaEstoniaPoland
BulgariaCroatia
%
Share of mining & quarrying in total industry GVA per EU country, 2014
0,20,40,70,91,21,21,61,72,22,22,32,42,93,03,1
3,94,95,4
7,0 7,67,9
14,023,4
0 5 10 15 20 25
Wood industryMotor vehicles
Transport equipmentRubber and plastic products
ComputersElectrical equipment
Paper productsPrinting and reproduction
FurnitureBasic pharmaceutical products
Water collection, treatment and supplyMachinery and equipment
Textiles - wearing apparel - leather…Other non-metallic mineral products
Chemical productsMining industry
Fabricated metal productsRepair and installation of machinery and…
Manufacture of other basic metalsCoke and refined petroleum products
Sewerage - Waste collectionElectricity, gas, steam and air…
Food - beverages - tobacco products
%
Composition of GVA per Industry subsector, 2014
8
The mining industry is a top employer – especially in the Greek periphery: 4% of the Greek workforce, exceeded by only three countries in the EU
0,3 0,4
0,6 0,7 0,8 0,8 0,9 1,0 1,2 1,2 1,3 1,4 1,4 1,6 1,7 1,7 1,8 1,9 2,1 2,2 2,3
2,5 2,6
3,0 3,1
3,5 7,2
0 2 4 6 8
ItalyBelgiumFrance*Hungary
LuxembourgGermany
NetherlandsAustria
SloveniaSlovakiaDenmarkSweden*
SpainPortugal*
FinlandLithuania
Czech RepublicLatvia
United KingdomRomaniaCyprus*CroatiaIrelandGreeceEstonia
BulgariaPoland
%
Share of mining & quarrying in total industry GVAper EU country, 2014
0,6 0,8 0,8 1,2 1,8 2,0 2,2 2,3 2,5 2,8 3,1 3,1 3,2 3,3 3,6 4,0 4,1 4,3 4,6
6,4 7,1
8,1 28,7
0 5 10 15 20 25 30 35
Motor vehiclesCoke and refined petroleum products
ComputersTransport equipmentElectrical equipment
Paper productsChemical products
Water collection, treatment and supplyRepair and installation of machinery and…
Printing and reproductionBasic pharmaceutical products
Wood industryMachinery and equipment
Rubber and plastic productsManufacture of other basic metals
Other non-metallic mineral productsMining industry
Sewerage - Waste collectionElectricity, gas, steam and air…
FurnitureTextiles - wearing apparel - leather…
Fabricated metal productsFood - beverages - tobacco products
%
Composition of employment per Industry subsector, 2014
9
Roughly half of total sales are abroad – mainly in Europe; 75% of total sales in the products that are exported to a diversified group of countries
Cement20%
Aluminium19%
Nickel19%
Marbles11%
Alumina10%
Betonite6%
Other Minerals
6%
Mixed Sulphides
4%
Perlite3%
Bauxite2%
Exports in value terms per mineral, 2013
Italy17%
Germany9%
France6%
United Kingdom
6%China6%
Turkey5%
U.S.A5%
Bulgaria4%
Romania4%
Poland4%
Other countries
19%
Exports in value terms per country of destination, 2014
10
Mining companies have both invested and been a magnet for investment
Total expenditure for resource exploration €4.7 million (2015) Plants / Warehouses / Ports
… fixed assets
… equity
… humancapital
Kerneos / European Bauxites (2015) Rhone Capital / S&B (2012) IMERYS / S&B (2015) Sibelco SCR / Ankerpoort / White Minerals S.A. (2013) Thermolith / SIDENOR / Macedonian Olivinites S.A. (2012)
4 companies run graduate programs (350 positions each year) in country plagued by youth unemployment
130,000 hours of training in 2015 (8.3 hours per capita)
GMEA members are planning €1.7 billion worth of investments by 2019
11
The Greek mining industry has weathered effectively the economic crisis
0
50
100
150
200
250
0
0,5
1
1,5
2
2,5
3
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
RM Sales RM Exports GDP
GDP, Raw Material Sales and Exports Evolution
RM
Sal
es a
nd E
xpor
ts (b
n€)
GD
P (bn€)
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… and is well-positioned to play a vital role in the Greek recovery
World population projected to increase to 9.7 billion by 2050, according to the UN
Lignite production is projection to increase until 2020
Positive outlook for metals (especially aluminum)
Substantial increase in marble and industrial mineral sales accelerated by the recovery of the Greek economy in 2017
Extro-
version
Financial
credibility
Sound risk
management
Responsible
practices
“The Resilience Recipe” Promising Outlook
13
A National Minerals Policy is key to unlocking this potential
The provisions of a national minerals policy must reflect the
national strategy for mineral resources built around the
following objectives:
Ensure optimal exploitation of resources Actively promote innovation Safeguard sustainable development Impose rigorous healthy, safety, quality, and
environment standards Consider reasonable offsets for the local society Foster enterprise Encourage R&D in new minerals and/or applications Render the industry competitive globally Promote the circular economy
Implementation of such a policy would spur innovation, improve productivity, and deliver substantial benefits to the Greek economy
14
The National Minerals Policy currently in place ticks many of these boxes in line with EU policies and regulations…
National Minerals Policy: Pillars
Policy for mineral
resources as a key ingredient
of the development
policy
Land planning that ensures access to
resources and resolution of land
use issues
Codification and modernization of mining legislation
Effectiveness in the use of
mineral resources
Training -research -innovation
Public dialogue and local community acceptance and
engagement
15
…however, its implementation has been hindered by several shortcomings
Time consuming and unnecessary complex licensing process for exploitation of mineral resources
Bureaucracy and multiple – often conflicting – laws for the same issues or select aspects of the same issues
Inability of the legal system to distinguish justified versus unjustified appeals that create a huge disincentive for new investments
Antiquated quarry code that does not account for new trends and discoveries in research and exploitation of minerals
Lack of comprehensive urban planning that does not reflect the potential of mineral resources
Absence – due to the ineffectiveness of IGMR (ΙΓΜΕ) – of thorough knowledge and understanding of the potential of mineral resources and their degree of exploitation
Social resistance towards new mining projects for fear of subpar environmental practices that is perpetuated by insufficient audit mechanisms
Last but not least, unstable tax and labor law that adversely impact competitiveness and investment in all industries - not exclusive to mining
16
The National Minerals Policy should pave the way for sustainable management of mineral resources in Greece
A comprehensive and coherent National Minerals Policy should pave the way for
sustainable management of mineral resources in Greece; the key elements of such a policy
would be the following:
• Map existing mineral resources
• Special provisions for regions with high value resources
• Provisions for post-mining land uses
• Revision of regional urban planning
• Update management studies for protected areas
• Streamline processes based on urban planning
• Issues specific directives and manuals
• Avoid overlaps• Implement Digital
Registry for Environmental Works (based on N.4014/2011)
• Codify legislation• Frequently update
all relevant resources
• New quarry law• Ease in the startup
of new activities
• Reinforce / Support research institutions
• Create GIS database
• Train on matters of sustainability in universities
• Include modules in the secondary education curricula
• Best practice sharing
• Effective function of inspecting authorities
• Avoid illegal mining• Establish financial
guarantees• Rationalize
allocation of benefits to local institutions
• Rehabilitate old mining sites
• Establish a forum for the Policy
Other Legal IssuesLand PlanningResearch -Training -
Knowledge
Social License to OperateLicensing
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However, without systematic implementation and elimination of some weaknesses of the Greek Administration none of the aims will be accomplished
To that end, several critical success factors have been identified – some of which
address weaknesses of the Greek Administration:
Access to land / port and other logistics infrastructure
Stable and equitable tax environment
Fast and coherent legal decisions
Access to innovation and research funding
Upgrade and support of all University departments and faculties of geosciences and
vocational education primarily but also information technology
18
The implementation of the National Minerals Policy would position both the industry and the Greek economy to reap significant benefits
Ensure continuity of supply of raw materials
Shield from raw material price volatility
Ensure compliance with EU policies and regulations
Create new job positions – besides mining in logistics, exploration, research etc.
Set the foundation for attracting investment
Eliminate antagonistic relationships with other prominent local industries (eg: tourism)
and promote joint value creation
Promote better utilization of infrastructure (especially transportation)
The mining industry could emerge as the national champion for the broader benefit of the Greek economy and the Greek people and a
considerable source of competitive advantage
VerheugenDirective, 2007
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Innovation is key in retaining competitive advantage in a global economy
Innovation is usually associated with cutting edge technologies but not with minerals
However, there is still a lot of unexplored potential in Greece’s wide raw material portfolio
Innovation often lies in re-using and upcycling, in other words enhancing the circular economy
Innovation manifests itself in several ways in the mining industry:
Deep sea Exploration / Exploitation
Treatment of mining and processing waste and of low grade and complex ores
Recycling of Industrial manufacturing wastes and End-of-life waste
Resource Efficient Paper Recycling Processes
Metallurgy processes
Application-led substitution
Material-led substitution
Processing of aggregates and
dimensional stone with improved processing
efficiency
Deep underground Exploration / Exploitation
Processing of industrial minerals with improved processing efficiency
20
An assessment on the criticality of raw materials for European manufacturing highlights areas with potential for innovation
EU Critical Raw Materials
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There is scope for innovation across the entire mining value chain
22
Innovation is a core business requirement for the mining industry in Greece and in Europe as a whole
… both as a defense mechanism against a number of challenges:• Dependence on imports• Dependency on finite
resources• Exposure to price volatility
and international trade turbulence
• Substitution of high environmental footprint materials
• Resource efficiency increase
… and as an offense mechanism for spurring growth:• Expanding client base• Transforming into strategic
partners for clients through providing tailor-made, integrated solutions
• Catering to new applications / industries / geographies
• Creating more efficient (“doing more with less”) and effective solutions (“doing better”)
• Developing new business and entrepreneurs
23
To reach the national champion status we do not need to re-invent the pick, we must be brave towards the implementation of the policy (1/2)
Lavrio Silver Mines
Penteli Marble
Largely thanks to mining the 5th century B.C. was the “Athenian Golden Age”, an age of prosperity, establishment of democracy, and significant
progress in sciences, philosophy, arts and culture
The Parthenon
Pericles
5th century B.C.
24
To reach the national champion status we do not need to re-invent the pick, we must be brave towards the implementation of the policy (2/2)
With world class reserves, substantial logistics advantage, extroversion, and through innovation
and implementation of the National Minerals Policy… just imagine what we can do now…
TODAY
