November 1, 2024 - The South Caucasus News - SouthCaucasusNews.com

Thousands of workers in Zestaphoni and Chiatura, two western Georgian towns, were left in uncertainty after Georgian Manganese, a major exporter of ferroalloys, told them it would halt production for four months from November 1.

Citing a drop in ferroalloy prices on the world market and permanent protests at the Chiatura mines, the company told workers a few days after the parliamentary vote that it would keep them on 60% of pay plus insurance. Georgian Manganese, an industry giant that operates a ferroalloy plant in Zestaphoni and manganese mines in Chiatura, Imereti region, said the “temporary” arrangement would last until March 1, 2025.

“We hope that the situation in the global markets will improve soon and we will be able to restore the work process sooner than planned,” the company said in its October 31 statement.

According to the company, one reason for the switch to a “temporary management regime” was the “sharp drop” in prices on the global silico-manganese market over the past two years. Georgian Manganese also cited ore shortages, blaming protesters in the mining town of Chiatura for shutting down “7 out of 12” mines, which the company said led to a 70% drop in ore extraction.

Residents of Shukruti, a village in Chiatura, had for months picketed the Korokhnali and Shukruti mines to demand fair compensation after manganese mining severely damaged or destroyed homes and orchards in their village. In a controversial ruling in August, the local court banned the villagers from protesting near the mines.

Manganese Mining: Shukruti Locals’ Protests Fall on Deaf Ears

The Shukruti protests, however, were not mentioned in earlier statements by the company’s management about cutting silico-manganese production by 60%.

“As of today, the demand for ferroalloys has again dropped to a minimal volume,” Giorgi Tatishvili, financial director of Georgian Manganese, told Rustavi 2 TV on October 2, a month before the company announced the production halt. “Despite the passing of the two-year period and our positive expectations, the crisis continues.”

Major Drop in U.S., Russia Exports

And the company had faced another similar crisis before the Shukruti protesters took up positions near the mines. Chiatura saw a major strike last year after Georgian Manganese imposed a similar months-long special regime, citing a global market crisis. At the time, the crisis mainly affected mining. The company claimed that production costs exceeded the market value of ferroalloys, with the crisis further aggravated by Russia restricting access to its market by imposing import duties.

Ferroalloys are one of the most important export products of Georgia. In 2022, the commodity accounted for over 8% of Georgia’s total exports, surpassed only by copper ores and concentrates (18.3%) and motor cars (16.2%). By 2023, however, ferroalloy exports have fallen by 60%, dropping to the 5th largest export commodity with 3% of all exports in one year.

One reason cited by the company was the inability to sell ferroalloys in the American market.

*Georgia’s ferro-alloy exports in 2014-2024 (2024 includes January-September data). Data source: Geostat*

“Last month, no ferroalloys were sold in the United States, our main export market,” Georgian Manganese said in the October 31 statement. While official statistics show that Georgia exported more manganese in the first nine months of 2024 than in all of 2023, the main export destination in 2024 was Turkey, which imported almost twice as much as the United States.

Workers Facing Financial Uncertainty

Despite earlier statements by company officials, two Imereti towns didn’t learn of the provisional regime until October 30, about four days after Georgia’s crucial parliamentary elections. According to widely disputed official results, the ruling Georgian Dream party won in both municipalities.

The region has historically been heavily dependent on industry, with manganese ore being mined in Chiatura since the 19th century and a ferro-alloy plant for processing the ore operating in Zestaphoni since 1933. Currently, up to 5,000 workers in the two municipalities are known to depend on Georgian Manganese for their income.

The news caused workers to worry about their financial security, especially among families with bank loans.

“People are facing a dilemma – to pay off bank debts or feed their families,” Magharoeli, an initiative group of Chiatura mine workers, wrote in a Facebook post following the announcement. The group called on those “for whom this situation is unbearable” to come together and demand, among other things, the suspension of their obligation to pay off bank loans without additional interest.

Since 2017, Georgian Manganese has been run by a state-appointed special manager. Full details of the company’s ownership are not entirely clear, but jailed Ukrainian oligarch Ihor Kolomoyskyy and a group of Georgian businessmen close to the ruling party have been identified as the ultimate shareholders.

Major Drop in U.S., Russia Exports

Workers Facing Financial Uncertainty

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