Mega project no debate

With the announced construction of “Ilovitsa” mine by Euromax Resources, Macedonia will receive one of the biggest investments in the branch for exploitation of mineral resources worth 500 to 700 million € and offering 500 jobs. The project has strong support by government institutions dealing with Economic Affairs, but the problem is that the only information shared with the public are the big numbers and values, without more comprehensive analysis on the gains and losses of the country. Excavation activities planned on Ograzden mountain will delve deep into the location, destroying the mountain, thus creating a big problem because it is located above the fertile Strumitsa field where agricultural crops are cultivated.

It is estimated that the mine has 120 tons of gold and 800,000  tons of copper, a huge capacity with a market value of ten billion US dollars. Euromax has already received a concession for exploring the area, and after all the legal procedures are finished, they will most likely sign a contract for exploitation of the mineral wealth. At first glance it is an attractive investment and possibly one of the biggest foreign investments in the country in recent years. However, economic analysts estimate that the state has chosen a bad strategy with the lower concession fees. Economist Branimir Jovanovic believes that Euromax Resources investment is not viable for the country.

“120 tons of gold and 800,000 tons of copper are planned to be extracted from the mine. According to current prices on the world markets, 1 kilogram of gold costs about 40,000 €, with 1 ton of copper currently costing 4,000 €in world markets. This means that 120 tons of gold cost 4.8 billion €and 800,000 tons of copper cost about 3.2 billion €. For an investment of 500 million €we practically get ore worth 8 billion €. Seen through this prism, we must in no way allow the mine to be in private hands, because in this case we virtually create a situation where national wealth ends up in the hands of a small number of foreigners who are actually owners of the mine” – explains Jovanovic.

Glossy promises, shallow expectations

Villagers from Bosilovo municipality are concerned and feel that their opinion and approval should be taken into account before the project continues. Residents of the region are mostly engaged in agriculture and have low income, and according to statistics, most of them are with a lower level of education.

Announcements of new hires do not impress residents of villages in Bosilovo municipality. Some of them might accept a job in the mine, but are concerned about the expropriation of their property and the compensation they will receive for their property and houses, according to the needs of the mining project.

“I am unemployed, and live off social care for 12 years”, says Nikola Trajkovski, a resident of Bossilovo that despite the poor economic situation, says would not work in the mine.

“Under no circumstances I would accept working in the mine. I have worked in Germany for 5/6 years and now have kidney problems. I did not come here to die in 3 months. I have a 6 year old child; I do not want to leave him without a father. Better not to work there”–  says Trajkovski.

History of mistakes

The announced jobs could certainly contribute to lower the unemployment rate, but for a gold mine which will use highly developed technologies, more qualified employees will be needed.

Economic parameters show that value of the mine is high, but how will this affect the welfare of miners who have a very low income, and work in one of the most dangerous occupations in Macedonia, with a high number of accidents, injuries and even deaths?

“According to National Statistical Office in Macedonia  just over 2300 workers were employed in the exploitation of ores of metal in 2015. This number has decreased with the liquidation of Indo Minerals and Metals and the closure of the mines Zletovo and Toranica at the end of the year. The average net salary of employees in this sector in the first 4 months of this year was 28,938 MKD (around 475 euros) or 42,172 MKD (690 euros )gross amount. This amount is 28% higher than the average salary. Figures show that in the mid-90s, before the privatization of the mines (and before they become a loss), this ratio was very similar. But we as a union cannot say that we are satisfied with the standard of the miners. Let us not forget that it is the hardest and riskiest profession and the workers always expect this to be taken into account in their income” – says Mare Andonova from the Union of Industry, Energy and Mining.

From the UIEF also explain that the income for miners is low and there is lots of room for improvement. According to them, revenues of new employees will not have an overly positive effect if they continue to move on the current average.

It’s all legal

The Ministry of Economy, which led the negotiations with Euromax Resources and signed the initial contracts did not give a specific answer to the question whether the strategy of concessions to foreign companies for exploitation of natural resources is worthwhile given the low fees of excavated ore or minerals in average run on 2% per ton of exploited material.

The position of the Ministry of Economy is that the Law on Mineral Resources conforms to European legislation, and the law is correctly adjusted to Directive 2006/21 / EC of the European Parliament and the Council on waste management industry for extraction. However, there is a lot of criticism from economic experts who feel that the state favors foreign companies to grant concessions, but wealth ends up abroad.

“The gold which the country will lose is estimated to be about 120 tons, which is a large amount, worth nearly 5 billion € at current prices. Also, the current price on world markets is lower than it was a few years ago and is likely to be higher in the next 20 years, so the state will lose even more” – explains Jovanovic.

Euromax Corporation together with the Ministry of Economy, acting on the behalf of the Government of the Republic of Macedonia, has signed an agreement for concession for exploitation of mineral resource pursuant to Article 54 and 55 of the Law on Mineral Resources. The Ministry of Economy failed to answer whether it expects or plans to offer processing of raw materials on the territory of Macedonia, which could bring additional income for the manufacturing industry.

Apart from the concession fees for exploited raw material, the investor is obliged with one other fee to the state. According to Article 3 of the Tariff, the use of space or surface on which the concession was awarded for exploitation of mineral resources on that surface and/or underground mining of metal minerals is charged 180,000.00 day / km2.

Miners, happy mining!

Euromax Resources plans for salary are still not known, but the Union of industry, energy and mining estimates they will be within current average in Macedonia. However, to UIEM, the question on the safety of miners is much more important, especially in an industry that has seen a large number of casualties in recent years.

“We cannot say much for this specific company, given that their activities in the region are still in early stages. As a member of the European and global union associations, UIEM is able to obtain information and data for many multinational companies and request assistance from unions in the country, if the company is serious and with a high number of employees. We expect all investors in Macedonia to be socially responsible companies above all, and this means openness and readiness to discuss all issues and matters”– said Andonova.

The fact that the mining industry does not set high criteria for qualification of employees is worrying, so accidents are extremely often.

“Training is required for each industry to create more successful and more productive workers. The need for training is more accented in mining, because even if it may not require any special qualifications, physical and mental durability could be crucial (particularly in underground mines). A general rule applies that companies can expect as much productivity and engagement as they invest in their employees. In Macedonia, where labor supply still exceeds demand, popular opinion is that anyone can do everything and anything, just to get employed. But in practice we hear employers complaining they cannot find specialized workers”– adds Andonova.

Between numbers and reality

Figures, statistics, forecasts, expectations and hopes surround Euromax Resources “mega” investment. Many already see the glitter of gold and the influx of fresh capital. The project is certainly justified by economic stand of logic, the stable and growing prices of precious metals will generate a profit for the company, and the state gets its share. The public is already convinced that this is another economic success. Revenues from concession fees, investments in construction of the mine, wages and contributions of employees and engaging economic potential when measured are only small part of the total value of gold and copper that will be sold on world markets. The calculations however do not include any effects on the very land and the natural environment that could further reduce the value of the Strumica region, and the possible effects on human health. The ambitions are high, but the benefits seem to be below expectations.