Chapter 4. Promotion Plan for Mining Industry The basic position for the embodiment of the policy of promotion on the mining industry is a synthetic, short-medium term view and connected with the economy based on the understanding of the actual situation of the mining industry. z Adjustment role between the government and private sector. z Restoration and reformation of the basement of the mining industry for the settlement of the cause of stagnation of the mining industry. z Adoption of the free economy and reconstruction of the mining industry z Contribution to the economy. z Method of promotion of the mining industry by using the characteristics of its mineral resources. The promotion for the Georgia mining industry is to concrete measures, which should be realized for the intermediate and long term linking to the development of the mining industry in the future and reconstructi117on for escaping the recent stagnation. The realization of measures for the promotion by the government on its own without aid is not easy in the government’s financial condition and recent economic situation in Georgia. It is indispensable to become a sound economy with the function of free economic principles. The reforms to increase tax revenue by reviewing the law system and attempting to decrease the tax rate with a time limit on such taxes as VAT, social tax, etc., severe management of tax levy, relax tax system, and simplify procedure of tax to reduce illegal business transactions in the economy are indispensable. On the other hand, the promotion of investment including foreign capital should be done by carrying out arrangement of the investment environment such as stability of politics and security, and reinforcement of banks, etc. To promote investment and to implement reforms like this will bring an effect of the realization of the promotion of measures of the mining industry and function as a free economic system. Support from international organizations, USA, Germany, Japan is important for realization of finance, introduction of technology, and knowledge of the EU and USA. z Improve economic condition - arrangement of investment environment, reduction of underground economy z Mining policy • reform of organization, revision of mining code - Technical cooperation z Restructure mine 132 - Technical cooperation, grant, finance loan z Model mine construction - Technical cooperation, grant, finance loan z Survey of actual environmental impact - Technical cooperation, finance loan z Mining Fund - Finance loan 1. Basic Policy for Promotion of Mining Industry 1-1 Mining Industry Position for Economic Development Copper, gold and manganese of the non-ferrous mining industry in Georgia’s mining industry will become the main pillar for production from the viewpoint of mineral reserves, basement of production, acquiring foreign currency and development of local society. Productivity of the Madneuli mine is recovering to the level before independence. However other mines are in suspension or near suspension. The recovery of production by reconstruction of existing mines and effective use of underground resources including the above mentioned metals is linked to over 10% of GDP and has the potential to become like an engine for economic development and improvement of the international balance of payments. Also the mining industry is close to the local society and a strong industry linked to the economy of the local society, promotion of employment and arrangement of the infrastructure. The mining industry has an important role in the development of the local society. z Mining industry becomes like an engine for the development of the economy z To recover production to the level before independence and make efficient use of mineral resources are indispensable. z The mining industry is important for the development of local society. z Training of human resources to free economy and internationalization are needed. 1-2 Basic Policy The policy for the promotion of the mining industry is based on the position of the mining industry for development of the economy. z The mining industry make to link with the development of the Georgia economy, development of the local society and promotion of employment. z The underground mineral resources possessed are effectively used by having competition in a free market economy toward acquiring foreign currency. International products of copper, gold and manganese are key metals and 133 priority targets. z The arrangement • reconstruction of existing mines and development of small-medium scale gold and copper mines is a priority subject. The arrangement of the basement of the mining industry attempts to achieve the above matter in an early stage. z The environment management system is planned to be constructed for the activity of the mining industry based on environmental protection. 1-3 Guideline for Production To set up a guideline of production and evaluation of the achievement of the guideline and improvement of policy are important for the promotion and development of the mining industry. The guideline should be realistic. The guideline is linked with mining policy,, industry policy and budget for the promotion of the mining industry. The guideline in the study stage based on the record of the mining industry, potential and reserves is as follows. z The mining industry has a 10% share of the GDP after 15 years. z Production goals of gold- 10 tons per year, copper- 50,000 tons per year, manganese (concentrate)- 1.5 million tons per year 2. Master Plan of Mining Promotion Master plan has 15-year term based on basic policy and production guidelines and is set up in three stages with each stage being a 5-year term. In the master plan, the promotion countermeasure (action program) is set up for the implementation of the plan. Master Plan（basic plan） 1st Stage 2nd Stage 3rd Stage 0－5 years 5－10 years 10－15 years Reconstruction and Construction of basement for Independence and growth arrangement development 2-1 Master Plan (Basic Plan) The mining basement area and mining production area work together effectively by expanding concretely each stage such as arrangement of recent condition, construction of basement and development for three stages (Table 4.1). 134 Table 4.1 Concept of Long-term Mining Industry Promotion Plan (Master Plan) Year 0 5 10 15 Term of Reconstruction and Term of Construction of Term of Independence Stage Arrangement Basement and Growth Technical Cooperation, Overseas Development Assistance Repayment of loans Aid (ODA) loan Drafting, establishment, Establishment of Stabilization of Policy, System execution deliberative council, system execution perfection Improvement of law on foreign Promotion of foreign capital Acceleration of Circumstance investments and procedures investment, creation of domestic capital domestic capital Financial Stock, t-bills, money market Stability of market, Expansion of finance market trust construction of base of trust from market Review of tax rate, kind of tax, Simplify procedure of tax, Stability of tax method of tax collection increase tax revenues revenue Tax system Relaxation to mining industry Improve tax system (special privileges) Mining code Revision Resolution of problems by implementation Restructure of mining Government organizations, comprehensive Resolution of problems by implementation organizations arrangement of research sector Arrangement of framework by Arrangement of local Arrangement of Infrastructure aid organizations, WB, ERBD infrastructure infrastructure of mining and Japan, etc. industry Arrangement for adaptation to Install facilities of mining Balance with condition Education free market economy industry (training center) of development in (universities) mining industry ODA exploration, exploration Promotion of exploration Promotion of lead by foreign capital by domestic investment exploration by perfect Exploration (with subsidy) privatization J/V with foreign capital Survey and prospecting subsidy by government organization Mining Implementation of disclosure, Break language barrier, Promotion of exchange industry construction of basement exchange with the world with the world information Reconstruction of existing Secure profit, develop by Promotion of mines, construct model mine finance from mining fund, development, Mine operation of model mine privatization of model mine Mining Survey of pollution, monitoring Strengthen management industry system system, network system environment Reconstruct manganese plant Study of smelting plants: Refining plant F/S, raise Au, Cu, Zn various industries Smelter, related to mining manufacturing industry (transportation, gunpowder) Prepare and establish mining Operation management of Abolish fund Finance fund, fund Production Au 3t, Cu 20,000 t, Mn conc. Au 5t, Cu 30,000 t, Mn Au 10 t, Cu 50,000 t, guideline for 500,000 t 1,000,000 t Mn 1,500,000 t study 135 First stage: term of reconstruction • arrangement (0-5 years) z Arrangement, rationalization and privatization of mines z Reform of organizations of the mining industry (unified, etc.) z Establishment of mining fund z Establishment of mining policy z Feasibility study of model mine a. Second stage: term of construction of development basement (5-10 years), forming capital z Making a market z Implementation of measures for improvement of productivity z Construct model mine z Introduction of foreign capital and formation of domestic capital z Promotion of exploration and development b. Third stage: term of independence • growth (10-15 years),