Issue 2, 2013. April-May

   

RESTORING THE RUSTAVI METALLURGICAL PLANT

When officials and economists evaluate Georgia's potential for foreign investment, agriculture, tourism, trade and transit usually top the list. Georgia's industrial sector may seem rooted to its rusting Soviet past, but investors are still betting that the country's mines and production capacity are a good opportunity. While overall investment fell from $1.1 billion in 2011 to $865.2 million last year, the level of investment in industry remained nearly stable. In 2012, foreign investors put $191.7 million in industry - more than any other sector of the economy. Over the next year, Investor.ge will profile industry and manufacturing plants in Georgia.

The Rustavi Metallurgical Plant, once the jewel of Georgia's industrial sector, is still the largest metallurgical complex in the region.


At the height of production, when the plant was an integral part of the Soviet Union's system of factories, the plant turned out 1.45 million tons of steel, 700 thousand tons of pig iron, and 500 thousand seamless pipes, among other products.

Today, there are 1800 people (just three of whom are expats) working at the plant, where "step by step" the new management is trying to revive its capacity, according to Dr. Farooq Siddiqui, the plant's director.

The plant's shops are working hard to increase steel, reinforcing rods, and pipes. A running ticker on the company's website (www.rmp.ge), marks steel product: 24.4 thousand tons and counting as of March 31. As capacity increases, Siddiqui said, the production numbers will also grow. The company plans on producing 100,000 tons of steel this year and 250,000 by 2015.

The plant is also reprocessing slag - waste from the production facility - into scrap that it uses to make steel.

Exports from the plant include steel, reinforcement rods for construction, seamless pipes, and scrap from its slag reprocessing plant.

The initial investment budget is $20 million, but Siddiqui noted that, if plans to reopen and modernize the central blast furnace are realized, the company will invest an estimated $175 million.

The central blast furnace, however, depends on iron ore supplies. The company is in negotiations with the Azerbaijani iron ore mines to create a business model to restore supply lines.