The FINANCIAL — With USD 20 million Georgian American Alloys is going to construct a mining factory in Chiatura in 2015. In total the company plans to invest USD 36 million during the current year, up from USD 15 million from last year. Highly effective cleaning filters are also going to be installed in order to reduce the impact on the environment.
Georgian American Alloys (GAA), Inc., headquartered in Miami, Florida, manufactures and supplies ferroalloys used in the manufacturing of iron and steel through wholly-owned US based subsidiaries Felman Production, LLC, Felman Trading, Inc., CC Metals & Alloys, LLC, and Eastern European-based Georgian Manganese, LLC, which is comprised of Chiatura Manganese Mine, Zestafoni Ferroalloy Plant, and Vartsikhe Hydroelectric facility.
Georgian Manganese is a major producer of high-grade and regular-grade silicomanganese in Georgia. Georgian Manganese’s mining operation includes seven mines and eight quarries. Vartsikhe 2005, LLC is a hydroelectric power plant that supplies power to its affiliated companies Chiatura Manganese Mine and Zestafoni Ferroalloys Plant.
GAA is the largest Georgian exporter. In 2014, the company invested USD 15 million. Out of this, USD 5 million has been issued for the construction of a hydro separation district, and USD 3 million – for Zestafoni power plant.
“We have big projects – worth USD 36 million – that will be implemented during 2015-2016. USD 20 million will be invested for the construction of the mining factory in Chiatura.
The U.S. is the key export country for the GAA. Georgia is the biggest exporter of silicomanganese to the United States, followed by South Africa. As Volodymyr Lozynskyy, General Director at Georgian Manganese, said, there are many reasons that force the company to lag behind its competitors on the global market.
“South Africa is one of the main competitors of Georgia. It is followed by Ukraine, Australia and Gabon. If we discuss Chiatura, a main part of the competition is the electricity rate. We own our hydropower plant, Vartsikhe, which is really helpful. However, the plant manages to satisfy only 60% of consumption. That is a big challenge for the local market as it increases the self-cost of products. In addition, our competitor countries have been regulating the reserves of the currency to increase exports. Meanwhile Georgia has never done this. So, this is one of the detriments to our competitiveness,” said Lozynsky.
Georgian society, and in particular advocates of the environment, have been frequently stating that Zestafoni District has turned into an ecological disaster zone due to the number of companies producing ferroalloys there. Meanwhile, Lozynsky said that when talking about pollution it is important to make clear the exact calculations regarding the sources of ecological damage.
“There should not be double-standards. For example, even in Europe you can find gas filling stations next to residential palaces. There are Ferro plants in Norway, Italy, France and other European countries. The pollution in Dunkerque is much worse than the pollution in Zestafoni. However the governments understand that they need it and they just leave it at work. So, it is very difficult to find a compromise. On the other hand, every possible environmental protection has to be based on best world practice, which is widely used by Americans. It is implemented in cooperation with the Ministry of Environment. It is important to make exact calculations about where the pollution comes from. Like in Europe, two car engines pollute more than Zestafoni factory,” said Lozynskyy.
“Our management is trying to improve many issues in the labour culture, even though many things have changed since the acquisition; the working environment is being developed gradually. We are changing the attitude of the work security system; implementing modern forms of producing and recycling ore. We focus particular attention on the quality of the workers’ satisfaction, which is reflected in improved nourishment portions, as well as in increasing the level of hygiene and environment and personal security,” Lozynskyy said.
He added that during 2015, the process of replacing old filters with new, highly effective cleaning filters will be completed. “It will significantly reduce the impact on the environment,” he believes.
The number of employees at GAA is over 6,000, with the average monthly salary at more than GEL 1,000. As Lozynskyy said, it is really hard for them to find qualified workers.
“Finding trained labour is one of the biggest challenges for us. In Georgia everyone is eager to become a lawyer or financer. It is difficult to get a skilled electrician or other such specialist. The Government should invest more in recruiting those to less popular professions. It will solve the unemployment problem as well. For example, when BP was building its pipeline in Georgia, they were forced to bring staff in from abroad,” Lozynskyy told The FINANCIAL.
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