Underground mining operations in Chiatura to be discontinued due to financial losses

Chiatura Management Company (CMC), in agreement with Georgian Manganese, has decided not to resume underground mining operations in Chiatura, citing financial unviability. The decision was announced in an official statement released by the company.

According to CMC, internationally recognized German consulting firm DMT GmbH & Co. KG conducted a technical, geological, and financial assessment of the Chiatura mines. The findings confirmed that underground extraction is financially unsustainable due to several factors, including:

– Low-quality ore, resulting in inefficient processing outcomes

– Stagnation of manganese concentrate prices and market instability

– High operational costs (OPEX), particularly in processing and underground extraction, exacerbated by rising labor and material expenses

– Ineffectiveness of further investments in the current environment

CMC’s director, Maksim Mazurenko, emphasized that the decision was based on DMT’s expert report, which officially confirmed the financial impracticality of underground mining in Chiatura.

“The financial situation of our enterprises has deteriorated significantly over the past year due to strikes and blockades by local communities. Even when operations were halted, we continued to pay employees their full salaries. These payments, made through loans, have now accumulated to nearly 83 million GEL. As a result, we suffered enormous losses, and banks have refused to issue new loans. This was the primary reason we were unable to continue wage payments,” Mazurenko stated.

He also pointed to large-scale protests in the Shukruti settlement, which forced the company to suspend production entirely in November of last year.

CMC further cited union-imposed social commitments as another factor that worsened its financial position.

“For instance, despite 70% of Chiatura’s mines being paralyzed due to protests, CMC continued to pay employees 100% of their salaries and maintained their family insurance packages. Even after operations were completely shut down, the company paid 60% of salaries to workers,” the statement read.

During the shutdown period, CMC reportedly distributed 82.6 million GEL in wages through bank loans. The company now needs to secure additional funds to compensate employees, with further details to be communicated directly to staff.

As part of its corporate social responsibility, CMC announced that it is actively working with stakeholders to develop alternative strategies for regional development.