Market Demand Makes Natural Resources Profitable

Natural resources shape one of the key reserves of our country and these resources are to boost economic growth in Georgia, Minister of Economy Natia Turnava noted.

Several weeks ago, she told the Forbes Week: “According to our appraisals, natural resources existing on 10% of our territory, the so-called extractable industrial minerals, are interesting resources for various investors

Today we have employed 3.8% of these resources. Do we have reserves to double this figure? – Sure, we do and we can. This signifies we have resources that we should employ to boost economic growth. To this end we need a very adapted structure, proper people on their places, personal responsibility for each task. This is our role. We should adjust this system to new tasks very soon”.

The Caucasus Business Week (CBW) has inquired what potential Georgia has in terms of minerals extraction, what we employ now and whether minerals efficient employment can boost economic growth.

‘Georgia should shape favorable investment climate for mining business development, including the country should improve the legislation and carry out other reforms to get essential benefits from mineral extraction”, Ilia University Professor geologist Archil Maghalashvili noted.

Mineral resources were explored about 40 years ago and since then no additional works were fulfilled. Natural resources recorded on the state balance represent huge national wealth, Maghalashvili noted.

„For many years improper methodology was employed for exploration of natural resources. Science and technologies have made huge progress and new exploration works may multiply our resources. There are serious chances in this respect”, Maghalashvili said.

In response to the question which minerals exist in the country and how competitive they are on international markets, Maghalashvili explains that the country is rich of natural resources, including gold and manganese. And the country is capable for multiplying these resources. We have got ores of various nonferrous and rare metals with perspectives for growing the current reserves.

“We have perspective for natural gas extraction, but it is a little difficult business to discover similar deposits in our conditions. The country has got rich water resources, including underground spring and mineral waters. We also possess very interesting resources of coating materials”, Maghalashvili noted.

What measures should be taken to activate extraction works in the country? Several conditions should be satisfied, including the legislation should be improved in compliance with modern requirements, Maghalashvili pointed out.

Minerals extraction works comprise a lot of problematic environmental aspects. Therefore, these issues should be analyzed and specified and reconnaissance works should be also promoted, Maghalashvili said.

“Improved legislation will draw investments into the exploration works. The country should also ensure efficient and safe exploitation of minerals”, Maghalashvili added.

Nino Chkhobadze, head of Greens of Georgia – Friends of the World organization, says: “Today the country has issued about 4000 mineral extraction licenses. It is important that all these components be revised anew.

Today mainly gold and manganese are extracted in the country and the remaining part of the ores are unimportant. It is of crucial importance to carry out minerals inventory and prepare properly and well-developed investment packages, she said.

‘Today the government carries out inventory of resources, but the data should be updated. Mining industry is a progressive direction and the same data cannot be used for many years. Huge financial resources are required for efficient employment of our resources”, Chkhobadze said.

 Georgia also mines coal, but its quality cannot satisfy competitive requirements on international market and bring corresponding profits. The same could be said regarding inert materials, which is extracted in compliance with the market demand volumes, she added.

“This is a construction material. There are various types of stones and due concepts should be prepared. There is the sand of Gajeti with good quality and its extraction is carried out. This is a good raw material for high-quality glass. We can organize a new enterprise in this respect. The one thing is when we have due resources and another thing is whether we have due processing enterprises.

Complex approaches are required. Only market demand makes minerals profitable. Without market demand minerals extraction is useless”, Chkhobadze said.

Moreover, oil and gas are also natural resources and they are regulated by other legislation. Very reasonable approaches are required regarding minerals extraction.

All processing enterprises should be more profitable. Minerals extraction cannot be carried out chaotically and strict control should be set on it, Chkhobadze added.

“Natural resources represent sensitive issue, because the ecosystem may be damaged in the extraction process without restoration perspectives. Minerals extractions should be carried out based on sustainable development principles. Uncontrolled extraction is inadmissible. At the same time, the country should revise its concept on extraction of inert materials. Namely, these materials should be used from not new deposits, but from basins of old hydro power plants. The Authorities should carry out protectionist policy and start extraction of inert materials. This process should be carried out not spontaneously, but reasonably and consecutively”, Nino Chkhobadze pointed out.