CENN on Georgian Mining

Exclusive Interview

The Caucasus Environmental NGO Network (CENN) works towards protecting the environment by fostering sustainable development throughout the South Caucasus. They specialize in a number of areas, including combating climate change, sustainable management of resources, and building and developing healthy and prosperous climate resilient communities.

Ann Inasaridze is the Environmental Resources Management Specialist at CENN. Her work entails areas of policy analysis and guidance to support environmental policy formulation, development of a responsible mining sector, sustainable forest management, climate change, and sustainable transport. Prior to her return to Georgia, Ann worked as a policy research consultant at Gold Mercury Interna-tional, a London-based think tank. She is the author of multiple publications concerning the envi-ronment and development.

GEORGIA TODAY sat down with Ann to get a better idea of what CENN does and the state of the Georgian mining industry.

Tell us about CENN’s operations and what you do

We deliver modern solutions to the public and business sectors and communities, assisting them in managing their environmental and related risks and helping them to achieve a competitive advantage through improved environmental and social performance.

Recently, CENN implemented the project, ‘Promoting Environmental and Social Accountability in the Mining Sector in the Caucasus,’ with financial support provided by Bread for the World (in Germany). The aim of the project is to enhance environmental and social security, establish the best international practices in the mining industry, and promote policy dialogue based on the cooperation of interested parties concerning sustainable natural resources management in Georgia.

What is the situation in the Tkibuli Coal Mine? What are some of the safety issues faced by workers?

In the South Caucasus, rural development is substantially hindered by the effects of irresponsible mining practices. Due to a weak legal and institutional capacity, these countries are highly susceptible to negative consequences from the mining sector. Rural communities that depend heavily on the local environment to maintain their way of life are often victims of unsustainable mining operations implemented near their territories.

The issue of safety is taken very seriously in the coal industry. In general, modern underground mines have rigorous safety rules and precautions and mining companies require a great deal of on-the-job safety training. However, even with the best safety standards in place, sometimes mining accidents still occur. Mining explosions are one of the most daunting safety concerns in underground mining, when methane is released from the coal seam. Ventilation problems occur when the ventilation systems fail. Mines sometimes collapse when the structure of the underground mine is not stable enough to sustain itself. When a mine collapses, there is a danger of trapping the workers inside the mine, resulting in injury or even death. Despite minimum labor standards defined in Georgian legis-lation, mining companies still do not adhere to them. Weak legislation, poor monitoring, and low compensation rates makes companies hesitant to invest in safety technologies and to implement ef-fective occupational health and safety trainings. In addition, workers are not aware of their rights.

What is being done to remedy these issues and what still needs to be done?

These days, European integration is seen as one way to overcome the shortcomings of the current legislation. In this regard, the EU–Georgia Association Agreement signed in 2013 may lead to im-portant changes in the mineral extraction and processing industry.

From the business perspective, companies wouldn’t want to know how much one workplace injury or fatality could cost their business in the long term! Litigation costs, compensations payments, hospital bills, legal fines and indirect costs for injuries can be much higher than the costs to ensure safety measures. Indirect costs also include the lack of productivity, worker replacement, increased in-surance premiums and attorney fees.

What are the negative impacts of mining in Georgia, aside from the safety conditions? How are the environment and local communities being affected?

There are different phases of mining, beginning with mineral ore exploration, production and recla-mation. Each phase of mining is associated with different sets of environmental and social impacts. Unsustainable resource extraction practices may affect the natural environment, agriculture, cultural heritage and human health.

The mining industry could contribute to the infrastructural development of regions, create employ-ment and increase the possibilities for the diversification of public revenues. Often, though, wealth quickly accumulates in the hands of a few, at high environmental costs for many. Control over this wealth is a source of contention and accounts for conflict, especially in developing countries.

In Georgia, rural communities, who depend heavily on the local environment to maintain their way of life, are often victims of unsustainable mining operations implemented near their territories.

The most notable is the Chiatura plateau, where manganese and industrial quartz sands have been mined using open-pit mining. The depth of some sand quarries reaches 40-50 m. After mine closures, empty and abandoned holes are left untreated. Rainwater mixes with extracted manganese waste and flows into the groundwater, which is a source of drinking water in affected villages. In addition, as a result of outdated water filters, the local population receives contaminated drinking water.

Furthermore, because of untreated extraction waste discharged from the Chiatura manganese facto-ries, downstream of the main ore processing facility is highly polluted. The black color of the Kvirila River illustrates this problem.

Companies do not undertake any reclamation works after mine closure. After the extraction of ore, companies leave villages in black mud. The consequences for the villagers are dire: landslides, col-lapsed houses, and cattle falling into huge open quarries that are left uncovered are a few examples. Some houses with cracked walls are still inhabited, causing fear and frustration among their inhabit-ants. Landslides continue and there is a risk of the effects spreading to surrounding areas over time.

What are some of the reasons that hinder sustainable mining operations in Georgia?

There are number of factors that define to what extent private companies incorporate social and envi-ronmental issues in their business decision-making process. These factors include:

- A Strict Environmental Regulation and Monitoring System - some companies find themselves subject to strict regulatory requirements governing one or more areas of their operations. Considering that environmental issues are gaining more attention over time, many companies peruse proactive policy and go beyond local regulation to avoid regulatory risks associated with higher operational standards that might be adopted by the government in the near future.

- Reputational Risk – especially when big reputable companies invest more in new production technologies to archive efficiency in production with less social and environmental costs in the long run. Mostly, these kinds of companies have a centralized policy, which means that their subsidiary companies operate under high standards even if local environmental regula-tion is weak. A company’s market value is attributed to its reputation. Thus, if an activity re-sults in the violation of an environmental, product safety, labor or human rights regulation, you’ll likely pay twice: the fine for noncompliance and the steep drop in sales and funding for breaching the trust of consumers and investors.

- Responsible Customers and Supply Chain Monitoring – unfortunately, not all of today’s con-sumers are willing to pay more for products made by companies with sustainable, transparent practices. When products with unsustainable and unethical manufacturing processes stop sell-ing, factories will stop making profits at the expanse of people or the planet. Financial incen-tives will force industry-wide change.

- Strong Community-Level Awareness – I should mention here that local communities are highly aware about the adverse impacts of mining, however, capacity building is still neces-sary to strengthen these communities in order to take part in decision-making processes. Pub-lic participation and consultations are essential prior to the project development in a particular area.

The interconnected factors mentioned above drive the environmental performance of the foreign companies operating in the mining industry in Georgia. Their environmental and social performance today illustrates that these firms have no long-term sustainable strategy and their operations are based on profit maximization in the short run at the expense of local environmental and social costs.

What is CENN doing to improve the situation?

CENN works on different levels to foster sustainable mining development in the South Caucasus, including a) Community mobilization in target regions to ensure that they are aware of mining-related regulations and impacts, have access to related public information and exercise public participation mechanisms in the decision-making process; b) Launching a multi-stakeholder issue-based policy dialogue in the South Caucasus countries to promote an environmentally and socially accountable mining sector; and c) Active communication with the business sector via multi-stakeholder meetings and consultations, ensuring that mining companies active in the South Caucasus are aware of European and other efficient international mining practices.

Based on comprehensive research and analysis, CENN, in cooperation with international experts and national stakeholders, has drafted major recommendations at policy, business and community levels. Within the project, it has established a number of guidelines for the different phases of mining operations according to international practices, such as:

a. Abandoned mining site inventory

b. Guidelines for waste management extraction

c. Guidelines for mine reclamation

d. Transparency and access to information at all stages

What do you hope to accomplish in the near future?

On its way to EU approximation, Georgia must introduce relevant changes to current legislation to meet the commitments undertaken by the country in the mining sector. As a result of the project’s lobbying and community advocacy, the mining sector has become a priority issue for the Government of Georgia, which intends to reform the mining sector to be in compliance with EU policies.

By Máté Földi