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Georgian mining companies bought by Russian investors

by | Jun 21, 2012

TBILISI, DFWatch – Two of the largest mining companies in Georgia have been taken over by Russian owners.

The owner of Madneuli and Quartzite, GeoProMining, June 14 published a statement which says that the two companies have been sold for USD 120 million. But the statement didn’t specify who the new owners are.

June 19 the two companies released another statement, which said that Capital Group Company bought them on June 14.

Shareholders of the latter are Russian businessmen Dmitry Korzhev and Dimitry Troitsky.

Forbes has listed Dmitry Korzhev on 1 140th place among billionaires worldwide and on 94th place in Russia. Dmitry Troitsky shares the same place with Korzhev in Forbes’ lists

Russian Forbes lists Korzhev on 123th place among richest Russian businessmen in 2012. He’s a a board member of O’Key, one of Russia’s largest supermarket chain. His property amounts to about USD 800 million.

Troitsky’s fortune is almost the same, according to Russian Forbes, but he’s on 125th place, also a board member of O’Key.

The statement by the former holding company GeoProMining says that it has already ended the financial deal.

“Such a strategy has been successfully executed and these businesses have demonstrated growth in annual production of five times under GeoProMining’s management. The divestiture is a direct result of the company’s decision to consider its strategic options for these entities following the recent tender organized by the Georgian government, where Madneuli’s mining license was tendered and acquired by a company not affiliated with GPM, effective from May 2014,” the statement says, adding that the company will now focus on its subsidiaries in Armenia.

GeoProMining acquired a license for Madneuli and Quartzite for USD 51.1 million in 2005, in an auction held by the Energy Ministry.

The new owner, Capital Group, also owns a mining business in Armenia, Nevaghusi Company, which they purchased for 204 million lari in a public auction in October 2011 and February 2012.

The two companies Madneuli and Quartzite write that they have already received a USD 10 million investment for geological surveys. The companies also plan to implement additional investments to develop the mining industry in Georgia.

“The companies’ priority remains taking care of the environment. Joint Stock Company Madneuli and Quartzite Ltd will continue allocating future investments for implementation of ecology projects.”

According to the statement, over 2 000 people are employed in both companies.

Madneuli Joint Stock Company was established in 1994. Quartzite ltd, which is a Australian-Georgian company, was established in 1997.

Yesterday, Goka Gavashvili from the governing party responded that the Russian takeover is a positive development.

“We salute Russian investments and other kinds of civic contacts. The danger is not ordinary business relations, but political investments. If Russian money will enter Georgian politics this is bad, but if Russian money will flow to Georgian business, that’s not bad.”

He added that Georgia does not salute Russian business which tries to buy Georgian politics, in a poorly veiled hint at opposition financier Bidzina Ivanishivli’s recent appearance in politics. One of the government’s main arguments against him is that he has business in Russia and that they do not want Russian money to influence Georgian politics.

The businessman has said he will sell his assets in Russia.

The opposition has frequently criticized Saakashvili’s regime for allowing Russian state owned companies to buy vital infrastructure in Georgia, which they argue compromises the country’s sovereignty. Telasi, a company which delivers electricity to Tbilisi, is owned by Russian state owned company Inter RAO UES.



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