GILS Mining: Georgia

Mining

Georgia

1. What is the nature and importance of the mining industry in your country? What are the target minerals? Which regions are most active?

In recent years the share has generally hovered around 1.0% to 1.5% of total GDP.

The primary target minerals in Georgia are manganese, copper and gold.

Mining activity is geographically concentrated in the following regions:

• Chiatura municipality: manganese mining.
• Kvemo Kartli Region, particularly Bolnisi municipality: copper and gold mining.

In 2024 gold contributed 3.5% of total Georgia export, ferroalloy – 10.7%, copper ores and concentrates – 3.1 %, precious metal ores and concentrates – 7.9%.

2. What are the principal laws that regulate the mining industry? What are the principal regulatory bodies that administer those laws? Were there any major amendments in the past year?

Legal framework regulating the mining industry in Georgia consists of the following laws:

• The Law of Georgia on Subsoil: the Law on Subsoil establishes the state's ownership over mineral resources, defines the licensing system as the primary mechanism for granting usage rights (often via auction), sets out the core obligations of license holders regarding rational use, environmental protection, safety, and payment, and designates state bodies for regulation and control.
• The Environmental Assessment Code of Georgia: the Code mandates Environmental Impact Assessments (EIAs) for mining projects that are likely to have significant environmental effects. It outlines the screening process, the scope of EIAs, public participation requirements, and the process for obtaining an environmental decision from the competent authority before a project can proceed.
• Law of Georgia on Licenses and Permits: the Law sets the general legal framework and procedures for issuing, modifying, and revoking licenses and permits across various sectors, including mining. The specific procedures for mining licenses are further detailed in the Law on Subsoil and related regulations.

The principal regulatory authority is the National Agency of the Mineral Resources (NAMR), which is primarily responsible for administering the Law on Subsoil. Its key functions include:

• Organizing auctions for mineral exploration and extraction licenses.
• Issuing, modifying, and terminating licenses.
• Maintaining the state registry of mineral resources and reserves.
• Monitoring compliance with license conditions (related to extraction plans, resource management).

3. What classification system does the mining industry use for reporting mineral resources and mineral reserves? (How does this system compare to generally recognised international systems such as the CIM Standards (Canada), the JORC Code (Australia) and the SAMREC Code (South Africa)? 

Georgia's mining industry uses a classification system derived from the former Soviet GKZ system (utilizing categories like A, B, C1, C2) for domestic regulatory purposes, project approvals, and national inventory. Technical Regulation №230 and its associated statistical forms (like Form 1-01) explicitly mandate this.

This Georgian system differs significantly from international CRIRSCO-aligned codes (JORC, CIM/NI 43-101, SAMREC) in its definitions, particularly regarding the stringent requirements for demonstrating economic viability ("Modifying Factors") to classify Reserves. The categories are not directly equivalent.

4. To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

The foundation of mining law in Georgia is the principle that the subsoil and its mineral resources are exclusively owned by the State. This is enshrined in the Constitution of Georgia and detailed in the Law of Georgia on Subsoil.  The state grants rights to use of mineral resources to private parties via licenses.

5. What information and data are publicly available to private parties that wish to engage in exploration and other mining activities?

Catalog of the geological fund is accessible through the website of NAMR (https://www.namr.gov.ge/en_GB/geology). The electronic version of the Unified State Geological Foundation, where information about all types of geological works conducted throughout Georgia is preserved. Since the geological fund’s materials are compiled mainly in Russian and the search system (card index) is also in Russian, its translation into Georgian creates a significant problem in the search system of the program. Therefore, information on the website is provided in Russian.

The preparation of the licensed object for auction is mainly done based on the application of the license seeker, in addition, it is also done on the initiative of the agency. After the license applicant uploads the application electronically, the application goes through the following stages:

I. First of all, the presented coordinates of the object are entered and recorded in the database, a proper passport is drawn up, in which the impending circumstances and restrictions are outlined, which can become an obstacle in the process of issuing a license or require an agreement with the relevant structures. 

II. Simultaneously, information about the presented object in the geological archive is processed (on the spot), and a field trip is made to each specific object, during which the field team checks and visually examines the presented coordinates and its surrounding area. The field group also assesses the current geodynamic and engineering geological situation to determine whether mineral extraction is feasible.

III. At the last stage, all the data is collected and a geo-information package is prepared, which is sent to the licensing department for further processing - for the announcement of the auction.

6. What mining rights may private parties acquire? How are these acquired (eg, first come, first considered; first come, first served; discretionary or competitive bidding)? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence or more senior tenure? What are the requirements to convert to a mining licence? 

Private parties in Georgia can acquire the rights to use subsoil resources through specific licenses. These generally cover exploration and extraction.  These rights are granted via a License for the Use of Subsoil, which specifies the type of activity (exploration, extraction), the specific mineral(s), the geographical area, and the duration.

The primary mechanism for acquiring licenses for mineral exploration and extraction in Georgia is through competitive auction (tender).

License holders have financial, operational and environmental obligations stipulated by the license terms:

• Financial obligations: payment of initial and annual license fees.
• Operational obligations: adherence to the work program and investment commitments; reporting to NAMR.
• Environmental obligations: conducting an Environmental Impact Assessment (EIA) and obtaining environmental permits; implementing environmental protection and mitigation measures outlined in the EIA, rehabilitation of license area, elaboration of mine closure and reclamation plan, providing respective financial guarantees.

The holder of an exploration license generally has a preferential or exclusive right to apply for the mining license covering that exploration area.

Conversion from an exploration license to extraction requires satisfaction of the following requirements:

• Filing feasibility study and technical reports proving discovery of the resources and economic feasibility for extraction.
• Filing mining plan.
• Approved of Environmental Impact Assessment (EIA).
• Approved closure plan.
• Providing financial guarantees.
• Providing evidence of fulfilment of obligations under exploration license.
• Payment of application fees.

7. What is the regime for the renewal and transfer of mineral licences? (Describe the renewal and transfer rights with respect to exploration, reconnaissance, exploitation and mining licences and the level of government discretion. Is government consent required to transfer a licence or with respect to change of control of the licence holder or its parent? What notices, filings or approvals are required in relation to the transfer of mineral rights or mining businesses?)

Based on specific conditions  and with consent from the Government of Georgia, the term of the license can be extended up to 10 years. This requires recalculation and payment of fees based on remaining resources/term.

Both renewal and transfer of mineral licenses in Georgia are possible but are subject to significant government oversight and discretion exercised primarily by the National Agency of Mines. Prior consent is mandatory for transfers and changes of control, requiring demonstration of the new entity's capability and commitment. Failure to comply with these requirements can lead to refusal or license revocation.

8. What is the typical duration of mining rights? Is there a requirement to relinquish a portion of the mining rights to the government after a certain number of years? (Can mining rights be extended or renewed, and under which conditions? Can mining rights be revoked or cancelled anticipatively by the government, and on which grounds?) 

Exploration Licenses: These are granted for a longer period sufficient to conduct detailed exploration, define a resource, and potentially complete feasibility studies. Initial terms might be up to 5 years. This term can be extended. 

Extraction (Mining) Licenses: The duration is generally linked to the projected economic life of the mine based on the approved feasibility study and reserves. Initial terms can be significantly longer, potentially 10, 15, 20, or even 25 years, depending on the scale of the deposit and the time required for rational exploitation, as well as types of the license. Please see below the terms of extraction licenses under the Law on Subsoil:

• Energy minerals – up to 45 years.
• Ores of ferrous and non-ferrous metals – up to 40 years.
• Construction materials – up to 30 years.
• Other non-metallic minerals – up to 30 years.
• Underground waters and natural non-combustible gases – up to 25 years.

The specific duration is always defined within the individual license terms.

License terms may include mandatory relinquishment requirements. This means the license holder must progressively give back portions of the licensed area over the exploration term (e.g., relinquishing 25% after 2 years, another 25% after 4 years).

Exploration and extraction licenses may be extended with the consent of the Government of Georgia.

Mining rights can be revoked by NAMR on the following grounds:

• Material breach of license conditions.
• Environmental and safety violations.
• Failure to commence operations / abandonment.
• Insolvency or bankruptcy.
• National security or overriding public interests.

9. Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties (eg, is the ownership of mining rights by foreign parties restricted or prohibited in any fashion? is it necessary or desirable for a foreign party to have a domestic partner)?

The ownership of mining rights of foreign investors is not restricted in Georgia.

10. What are the principal business structures used by private parties carrying on mining activities (eg, branches, corporations, partnerships, joint ventures and trusts)? 

Local presence, i.e. incorporation of the presence for carrying out mining activities is required.  Mining activities can be carried out by branches or corporate structures, such as LLC or JSC.

11. What duties, royalties and taxes are payable by private parties carrying on mining activities? Are these revenue-based or profit-based? 

Royalties (Subsoil Use Fee):

Royalties are typically calculated based on the volume of the extracted mineral, or

a percentage of the value of the extracted mineral. Rates vary significantly depending on the type of mineral being extracted (e.g., precious metals, base metals, construction materials, mineral water will have different rates). 

Corporate Income Tax (CIT):

Georgia employs an "Estonian model" of CIT. This means that only profits distributed as dividends are subject to CIT at the rate of 15%. retained and reinvested by the company are not taxed.

Value Added Tax (VAT):

VAT applies at the rate of 18% to the supply of goods and services. Mining companies will typically charge VAT on their sales of processed minerals and can claim input VAT credits.

Basis: Revenue-based (Transaction Value). VAT is calculated on the sales price (taxable supply value) of the minerals sold.

License Fees:

Fees are paid for obtaining and maintaining the legal right to conduct mining activities.

• License Acquisition Fee: one-time payment, especially if the license is acquired through a competitive auction.
• A recurring fee payable for holding the license, sometimes based on the area size or type of license.

Environmental Payments/Fees:

Such fees may include fees for environmental permits, charges on specific emissions or pollutants (if applicable), or contributions towards reclamation funds. The most significant financial obligation is often the financial guarantee required to cover mine closure costs.

Personal Income Tax (PIT). Pension Contributions:

Description: Mining companies as tax agents are required to withhold PIT from their employees' salaries.  Pension contributions should be withheld at the source of payment at the rate of 2% and accrued and paid by an employer at the rate of 2%.

Property Tax:

Tax payable on land and buildings owned by the company.

12. What is the environmental review and permitting process for a mining project? How long does it normally take to obtain the necessary permits? 

Environmental Review and Permitting Process

The core of the process for significant mining projects (especially extraction) is the Environmental Impact Assessment (EIA). Stages of EIA are as follows:

Screening (Applicability Check):

Activities listed in Annex I of the Environmental Assessment Code require a mandatory EIA. Mining of mineral resources (extraction) typically falls under Annex I. Certain exploration activities might fall under Annex II, meaning they are subject to a screening procedure where the Ministry of Environmental Protection and Agriculture (MEPA) decides if an EIA is necessary based on potential impacts, location, and characteristics. Smaller-scale activities might be exempt.

Scoping:

If EIA is required (either mandatory under Annex I or determined through screening for Annex II), this stage defines the scope of the EIA report. It identifies the key environmental and social issues to be assessed, the extent of information needed, alternatives to be considered, and the methodologies to be used.

License seeker prepares and submits a Scoping Report to MEPA.

MEPA makes the Scoping Report publicly available and holds public consultations (meetings, written comments).

MEPA considers the report and public feedback and issues a formal Scoping Opinion, which dictates the required content and focus of the full EIA report. This opinion is legally binding for the EIA preparation.

EIA Report Preparation:

The license seeker prepares the EIA Report 

Public Consultation on EIA Report:

The EIA Report is delivered to MEPA and made publicly available (online and often in local municipalities).

MEPA organizes and conducts public hearings near the project site.

MEPA Review and Decision:

Review the EIA Report considers the feedback from public consultations and relevant state agencies, and issuance of a final decision on the environmental acceptability of the project.

A positive Environmental Decision is a prerequisite for obtaining the main Mining License (especially for extraction) from the NAMR.

For a substantial mining project requiring a full EIA, a realistic timeframe from initiating the environmental review process (screening/scoping) to obtaining the final Environmental Decision could range from 12 months to 2 years, and potentially longer in complex or controversial cases.

13. What is the closure and remediation process for a mining project? What performance bonds, guarantees and other financial assurances are required? 

The closure and remediation process is a mandatory and integral part of a mining project in Georgia. The process is governed by the Environmental Assessment Code and related regulations.

Mine closure and remediation process is a part of planning within the scope of EIA. The Closure and Reclamation Plan is reviewed and approved by the Ministry of Environmental Protection and Agriculture (MEPA) as part of the overall Environmental Decision on the EIA.

Georgia mandates financial assurances to ensure that funds are available for closure and remediation, even if the operator defaults.  

Common forms of financial guarantees include:

• Bank guarantee.
• Surety bond.
• Letter of credit.
• Cash deposit.

Author: Sofia Roinishvili