Georgia, Stemcor Finalize USD 77 mln Deal

Georgian Manganese, a subsidiary of the UK-based Stemcor, and the Georgian government finalized the privatization deal of Chiaturmanganumi and Vartsikhe hydro power for a total amount of USD 77 million on January 5.

Chiaturmanganumi, a manganese mining factory in Chiatura, was sold for USD 20 million and Vartsikhe hydro power plant for USD 57 million.

Stemcor already owns Zestaponi Ferro Alloy Plant and the company has already repaid the enterprise?s GEL 63 million (about GEL 36 million) debt, according to the Georgian Economy Ministry.

Chiaturmanganumi, Zestaponi Ferro-Alloy factory and Vartsikhe hydro power plant represent interlinked enterprises and parts of a single technological process.

Russia?s EvrAzHolding bought Chiaturmanganumi and the Vartsikhe hydro power plant in early 2005 for USD 132 million but pulled out from the privatization deal five months later, reportedly because of falling manganese prices. As a result of the pullout the Georgian government received USD 20 million, which was paid by EvrAzHolding as a cash deposit.

?This [deal with Stemcor] is very successful for Georgia, and is expected to help Chiaturmanganumi to survive,? Giorgi Arveladze, the Georgian Economy Minister, told reporters on January 5.

Stemcor?s subsidiary Georgian Manganese has undertaken commitments to invest USD 100 million within the next two years and to increase the annual extraction of manganese from the current 200 000 tons up to 300 000 tons.

At least 200 000 tons of manganese extracted from Chiatura will be processed in the Zestaponi Ferro Alloy Plant in western Georgia, according to the deal.

The company has also undertaken a commitment to increase ferroalloys production from the current 120 000 tons up to 200 000 tons during the first year of operation and up to 300 000 tons during the second year.

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