HISTORY OF BOLNISI MINEFIELDS

By. Kate Mikeladze

Reader’s interest to “Bolnisi gold” has not weakened for six years already. Much has been done and written, but… Much will be written because this topic has not yet been exhausted. Some questions remain to be unclear.

We can make several conclusions by using press materials, but they will not be final and definite enough. The headquarters of JSC “Madneuli” was reluctant to speak to the press, too. Yet, many questions could be answered. One can get an impression that someone manipulates this topic. The society receives as much information as is permissible, the rest is left for some other time… Somehow or other, we will try to solve some principal issues.
Bolnisi minefield is the only one in Georgia where gold is extracted from secondary quartzite. Other minefield has not yet been discovered. Quartzite with gold has been kept in warehouses till 90-ieth. Copper concentrate has been sent from “Madneuli” to Russia.
In April 1994 JSC “Madneuli” obtained a license for gold mining in Bolnisi. Under the terms of the license, a representative of “Madneuli”, “Quartzite” ltd. was responsible for performing ore mining, affinage and realisation, and “Ecologist” ltd was responsible for filtration of polluted waters. Gold fields in Bolnisi minefields total 14 tonnes. The ratio of gold mining changes yearly in view of multitude of reasons. As far as is known, up to 300 kg gold is extracted in minefields yearly.
According to Kutelia, head of Minerals Defence Department, it would be profitable for Georgia to build an affinage factory if its oil reserves last for minimum 50 years (extraction of gold from —-). Many people took interest in the idea. The President expressed this idea four years ago during his visit to Bolnisi. However, the words did not produce real considerations and estimations. Generally speaking, affinage factories cost much, and only rich countries can afford them.
Let us go back to the past: “Madneuli” and “Cropwood limit” were founders of “Quartzite”. Approximately in 1977 “Cropwood” (a lawyers’ firm) later turned into “Bolnisi Mining Operations”. Why did it happen and what has it changed? It remains to be a subject of controversy even till now. Press has often mentioned House of Control and prosecutor’s office: prosecutor’s office called representatives of “Bolnisi Mining Operations” frauds and former officials from Estate Administration Ministry did their best to transfer money to off-shore zones.
Today, press-centre of the Control House says that documents about “Madneuli” are at the disposal of prosecutor’s office, and the prosecutor’s office says all documents are in the House of Control.
It is difficult to say what documents give the prosecutor’s office the right to consider activities of the above-mentioned “frauds” and former officials of Estate Administration Ministry a crime. Issues that are of interest to “MME” have been kept in the Control House for about a week. Later on, it turned out that there were no answers in the Control House. Here are the questions:
1. What is the date of issue of documents that enable mass media to name the figure 10 million dollars – it is the figure that was lost by the Georgian party during the work of “Madneuli”?
2. Under a certain document in English language (publication in “Georgian Times”) money was transferred to the Australian “Macvor” Bank. Who signed this document and when was it issued?
3. There is another document (called principal agreement) in accordance with which gold was to be transferred to factory “Johnson Mat” in England and money was to be transferred back to Georgia. Is the Control House aware of this document. What does it date back and who was it signed by? Was this agreement executed in a certain year?
4. “Madneuli”, “Quartzite”, “Bolnisi Mining Operations” and “Cropwood limited” were involved in this matter. Which company has more infringements? Is there any information about it on Internet?
Work on the article would have been much easier if there had been answers to these questions. Yet no one cared to answer them. According to the “Georgian Times” information, four firms took part in this matter that took place in 1999-2000. (Other years’ information is well “concealed”, and it will not be available soon). This matter looks as follows:
1. Approximately 1,6 tonnes of gold and 0,9 tonnes of silver (the weight of gold is given in ounces in the charts, but we translated them into tonnes for a reader to understand it better). The total cost of the gold and silver was 14 957 414 US dollars, less than 15 millions and more than 1, million for the six months of 2000). The total figure for two months was 16.266197 US dollars.
2. In 1999-2000, 26781955 dollars’ worth gold and silver was transferred to the Australian Bank “Macvor limited” from factory “Johnson Mat”. It turns out that a great amount of money is transferred from Australia to England.
3. In this stage approximately 15 million dollars as well as 4 million bank loan are transferred from “Macvor bank” to “Bolnisi Mining Operations” – 20 million dollars all in all.
4. And, lastly, what returns to Georgia after these three ways are passed? 4 201 349 US dollars from “Bolnisi Mining”, less than 15 800 000. However, there is one vector in this matter: 11 791 123 dollars are transferred from the mentioned Australian Bank to Georgia (only for expenses). In short, 15 992 472 dollars or up to 16 million dollars were transferred to Georgia in two channels. Let us remember how much gold and silver was exported: 16 266 197 dollars. It turns out that the difference between exported and imported funds was 273725 dollars. This is the sum that was left abroad (certainly, if we will be based on this chart, and it is not a facade char). Is it much or little? We know that the Australian party (“Bolnisi Mining”) exported golden ore for affinage to England. Affinage, certainly, costs money. There is a special formula: one ounce costs 0.65 dollars. If 51 038 ounces of gold are exported from Georgia, its affinage would cost 33 thousand dollars. Added to this are transportation expenses… As a result of it, we can say that the amount gold that was left abroad totalled 24 kg. 33 thousand dollars are subtracted from the sum that was left abroad, they are mean for affinage. Approximately 240 725 dollars were left abroad: it is the cost of 24 kg of gold (given the fact that one kilogram costs 10 dollars).
Where are tonnes of gold that were left in Australia? Or millions of dollars? We repeat that charts of 1994-98 years were not published. Perhaps, there was a different situation then. Only a small part of exported funds returned to Georgia. Perhaps, large amounts of gold and money have really accumulated illegally in Australia, which made the Control House, prosecutor’s office and journalists restless. This topic is not a pleasant one to members of Commission that was formed by 2000 Gia Arsenishvili by the decree of 5 July 2000. This Commission was formed with the purpose of studying the case of JSC “Madneuli”. It included: George Gachichiladze, Nino Chkhabadze, Vano Chkhartishvili, Vaja Kapanadze, Zurab Kutelia, Niko Orvelashvili, Mikhail Ukleba, Levan Mamaladze,etc. The Commission was to perfom the work in one week (!). It did so and sent conclusion to the Chancellery. However, today it is impossible to find the conclusion let alone to read it. This conclusion was neither in the Estate Administration Ministry nor in the Minerals Defence Department. Kutelia says he keeps all documents, but the conclusion is still nowhere to be seen. The conclusion of the Commission is not even kept in the archives of the Chancellery, though there is a decree. Niko Orvelashvili, one of the Commission members and an independent expert, says: “The conclusion did not suit Mamaladze so it disappeared”. It is unclear what the purpose of the Commission’s work was if its conclusion would have such fate. None of the Commission members makes any particular comments. Some have already changed posts and do not have any wish to speak about that time, others have forgotten details of the conclusion…
The situation is said to have improved since 2000 after the appointment of Zurab LobJanidze as director of “Madneuli”. The ecological situation changed for the better, too. If before acid, quarry water ran into the river of Kazrutela, there is a different situation today. Lobjanidze is said to dislike speaking on telephone, but, perhaps, he dislikes speaking to journalists even more. S. Rekhviashvili, chairman of observers’ council, is reluctant to speak to the press, too. In spite of numerous attempts, “Madneuli” office is still unapproachable. Somehow or other, everyone has already grown tired of collision of someone’s interests, checking, legal procedures and journalists. There are minutes of the Commission work. For example, sessions of the State minister where Lobjanidze said the industrial complex had no budget indebtedness and arrears of wages. Circulating assets totalled 1 million GEL. Company “Glenkore International” is the greatest investor. Investments of this company in “Madneuli” totalled 1 800 00o dollars. The latter was obliged to supply ore concentrate,. At some stage “Madneuli” was unable to fulfill this condition. “Glenkore” intends to apply to Bolnisi court with the claim to liquidate “Madneuli”. As far as we know, the case has not yet been resolved. “Madneuli” presented a “reorganization” plan. Its staged analysis is under way.
According to Lobjanidze, “Quartzite” can pay 500 thousands a year, but he boosts expenses and conceals profit. Former partners of “Madneuli” and “Quartzite” have, presumably, failed to agree about who should pay and for what. Perhaps, it was the reason of Gisa Mgaloblishvili’s, one of “Quartzite” director’s retirement.
A document drawn by the Minerals Defense Department was aimed at the improvement of ore mining in JSC “Madneuli”. According to this document, 3,5 million ton reserves of secondary quartzite (it contains 2.8 thousand kg of gold, 20 tons of silver) as well as 11.4 tons of gold and silver in warehouses belong to the assets of the industrial complex. Economic efficiency of the processing of secondary quartzite does not give rise to suspicions.
In 1996-97 an economic decline was observed in “Madneuli” and ore mining has decreased. Since 2000 “Madneuli” has incessantly worked and since September 1 it has worked at full capacity. Ways of averting crisis were envisaged: it is necessary to reorganise the enterprise (with this purpose “Madneuli” should either find an investor or pay for the new equipment from its profits). If “Madneuli” will not be able to implement it, a tender should be prepared where its block of shares can be purchased.
Javakhishvili’s work “Borders of Georgia” mentioned the significance of these mine fields: “Vakhtang the sixth and king Irakli were well aware of the importance of mine fields in Kvemo Kartli for the economic well-being of Georgia who did their best to restore mining. These ores provided Georgia with metal for casting money as well as net profit. N. Butkov said that in his time in 1778 king Irakli increased revenues of his country due to fields of copper, gold, silver and ore. He invited Greeks for ore mining. The profits from it were used for keeping the army that defended borders of Georgia… It is proved by the fact that even in the last years of king Irakli’s reighn in the end of 18 century, net profit from ore fields totalled one fourth of the annual income of gold and silver”.
Let us imagine the budget of modern Georgia: about 800 million laris, then its fourth part 200 million laris. If profit from the mine fields in 18th century was fourth part of the total revenues, 5-year work with modern equipment in Bolnisi mine fields left to us a minute of Commission’s work instead of any profits, veiled opposition of financial groups and perplexed legal matters, and the Control House, prosecutor’s office and mass media were left to care about this “income”.