The FINANCIAL — Madneuli mining company, which is one of the largest contributors of Georgian export (10%), spent up to 1 million GEL on Corporate Social Responsibility activities in 2010. In the next year the company will be spending even more – 1.2 million GEL – on different activities related to the sponsorship of sports events, concerts, arts, exhibitions, charity, etc.
George Devadze, General Director at Madneuli, says that there’s almost no event where Madneuli isn’t involved as a sponsor or supporter.
Madneuli paid 13.1 million GEL to the state budget in 2009 and in 2010 (10 months) – 15.6 million GEL. 60% of its revenue comes from copper, 40% from gold.
Q. Environmental protection is one of the activities within the framework of CSR. How does Madneuli support environment protection?
A. As a company dealing with natural resources, our priority is ecology and environmental protection. We have participated in many events related to this. We have donated trees and plants to different organizations and have worked closely with the Ministry of Environment on many different projects in this field.
Madneuli mining was built during the time of the Soviet Union, when there were different environmental standards. Now we’re following internationally set standards. Consequently every day we test the condition of the river passing through the Kazreti region and all evaporation works are to be in accordance with set standards.
There can be no drop of polluted water outside. Every month we’re buying hundreds of thousands of cubic meters of water, which means that we should have a closed circle and not let water leak out.
We also had an environmental audit done by Golder, and they did quite respectable auditing. For 2011 we’ve approved a 3 million GEL budget to improve the environmental situation at our company.
Q. What is the total budget Madneuli spends on CSR activities every year? And what was the amount for this year?
A. The company spent 560,000 GEL in the first 10 months of 2010 on sponsorships and charities and the 2011 budget includes 1,200,000 GEL in this direction. We’ll also have spent up to 1 million on CSR by the end of this year on sports events, concerts, arts, exhibitions, etc.
We’re the largest company in Georgia participating in social responsibility projects locally as well as for the whole region. CSR is of huge importance to Madneuli as it employs 98% of the local population in the Bolnisi region, and people who are living in Kazreti. The Kazreti population is roughly 4,000 and from this figure about 1,000 work at Madneuli. Some of the locals also work for our contractors on different infrastructure projects.
Being largely presented in the village Kazreti also gives us the huge responsibility to sponsor events, to maintain kindergartens, schools, finance concerts, football matches and the like.
In addition in the Bolnisi region only, every month we pay over 500,000 USD as local tax.
Q. What kind of energy efficient technologies do you use at Madneuli?
A. At the moment Madneuli does not have any alternative energy sources. We plan to explore solar energy and sustainable energy opportunities in the future with significance now being put on global warming, etc. To be more energy efficient EBRD has offered us financing for the building of alternative energy resources, in that respect we’ve already prepared the project and in 2011 we’ll be financed by EBRD.
We grind 200,000 tons of ore. 80% of our electricity consumption is coming from mills. Now we’re going to change the engine of the appliance. Therefore in 2011 we’ll be saving our energy consumption by 20%.
Q. Human Resources represents one of the fields of CSR, what are the activities done within the framework of Human Resource Management at Madneuli? Please tell us about your HR strategy.
A. JSC Madneuli employees benefit by having effective and quality insurance. The company conducts health screenings on a regular basis. It collaborates with a professional union and is involved in many activities organized by the Georgian Labour Union.
There are 1,100 workers at Madneuli who are paid above-average salaries, on average 600 USD per month. 20% are engineers whilst the remaining 80% are common employees. We employ people of 7 different nationalities including foreigners from Australia and South Africa, hence they’re also involved in training our Georgian workforce. We also send some of our staff abroad to study software.
We are in a transitional period now, our strategy is to develop modern systems and technologies in the Human Resources area and have highly skilled and professional employees.
Q. What plans do you have to further increase your production volume?
A. Our significant investments in new technologies will definitely help the quality of our product. These modern technologies will also speed up production prices which of course will raise our production volumes. Given the fact that our product comes from natural resources, of course the amount of resources available will have a significant effect on the production volumes as well.
Reserves, as you know, are decreasing every year, hence we’re always looking for new areas for extra drilling to fill up reserves.
Q. What was the total investment of the company in 2010?
A. 2.1 million USD in mining machinery and equipment and exploration drilling. In addition we’ve very ambitious plans with regards to mining remains and their treatment. Hence we’ve installed re-processing technologies in order to minimize the loss from the ore. In this regard we’ve made 20 million of additional investment, a project which is due between 2010-15.
Whereas now the lifetime of Madneuli is 7-10 years without making such investments, after such steps are taken it would further prolong our operations for 20 years from now.
Q. What investment does the company plan to have in 2011? How will the investment priorities be changed at Madneuli?
A. The company plans to invest 3.6 million USD in 2011. That includes exploration drilling, new machinery and equipment, environmental projects to the amount of 1 million USD additionally to the existing monthly expenses.
Madneuli Export is made mostly to EU countries, Bulgaria and Germany. More than 10% of Georgian export is contributed by JSC Madneuli.
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