Zestaponi Ferroalloy Plant and Chiatura Management Company of Georgian Manganese, a producer and exporter of ferroalloys and manganese ore, have suspended operations starting today until March 1 following a “significant decline” in silicomanganese prices on the global market and decreased demand over the past two years.
Georgian Manganese cited “difficulties” for Chiatura Management Company in supplying ore “due to picketing by local residents”, which it said had “paralysed seven out of twelve mines” in the western town.
The Plant will enter temporary management, with production capacities “completely shut down” and ferroalloy production halted, Georgian Manganese said, adding employees would be paid 60 percent of their salary during the period and “maintain their full insurance benefits”.
"Employees engaged in current and planned capital repair work will receive 100 percent of their salary”, it added.
"The challenges have been compounded by a substantial shortage of ore. The Chiatura Management Company, the factory’s contractor, has faced difficulties in supplying ore, primarily due to picketing by local residents that has paralysed seven out of twelve mines. This disruption has resulted in a 70 percent decrease in ore extraction in the town over the past eight months”, it also claimed.
The Management Company also announced on Thursday production in the town had been “completely halted” due to a “financial crisis stemming from radical protests” in the village of Shukruti, near Chiatura, that have demanded compensation for damage allegedly inflicted on their homes due to mining activity in the area.
"Our management team, along with the heads of various enterprises, recently evaluated the impact of the eight-month crisis [...] The combination of internal and external factors has created a significant financial crisis for the Chiaturia enterprises, necessitating the implementation of a special management regime”, the company said.
"In the coming four months, the company will work towards developing and negotiating a crisis management plan with all parties involved, as required by law. The development and execution of this plan are critical for improving the financial situation of the enterprises, making ore mining profitable again, and eliminating unlawful and persistent work stoppages”, it added.
Zestaponi Ferroalloy Plant cut silicomanganese production by 60 percent in early October due to a “continued decline in global market prices and reduced demand”.
Georgian Manganese also said the factory had “not made any sales” in its primary export market of the United States in the last month.
The company added management “remains hopeful for an improvement” in global market conditions, which it said would allow for an earlier resumption of operations.
