J.E. Austin Associates, Inc.

I. Scope of Work

A. Background

The global construction materials market grew by 1.8 percent in 2009 to reach a value of USD 539.3 billion. This market is forecast to have a value of USD 823.3 billion in 2014. Imports of construction materials and equipment into Georgia, Armenia, and Azerbaijan are also growing rapidly and totaled more than USD 5 billion in 2008. The construction sector in Georgia grew by more than 450% since 2003 and is currently valued at approximately GEL 1.7 billion (USD 1 billion). Despite the global slowdown, the construction sectors in Georgia, Azerbaijan and Armenia are likely to remain relatively robust.

However, the value of Georgia’s construction material imports is five times greater than the value of its exports. Georgia possesses largely idle deposits for a number of important raw materials that are important in the construction sector. It also has location advantages and a strong business environment that could enable it to better serve its own domestic market as well as increase exports within the region and beyond. Domestic production of several bulk and low value-added materials (e.g. aggregates, metal/wood/plastic components, stone, ceramic products), if developed, would avoid high transport costs associated with importation.

A number of obstacles have been identified that hinder development of the sector. These include a lack of building codes, lack of standards for construction materials, limited skills in the workforce, natural monopolization in the production of materials, use of out-of-date technologies, limited knowledge of new technologies and construction practices among builders and developers, and a lack of awareness of energy efficient and environmentally-friendly materials.

There are 60 companies in Georgia with licenses to mine basalt. Combined, they can annually quarry 650,000 m3. The basalt stone is sold on the local market, largely as a construction material for facing stone on exterior walls and as cobblestone for streets and pathways. Additionally, two companies in Georgia process basalt into basalt fiber, mat, and wool.

These two companies produce 96,000m2 of mat/wool and 150 tons of fiber, with a total value of USD 1 million. Georgia’s two basalt fiber producers sell domestically, as well as export regionally to Azerbaijan, Turkey, Croatia, and Germany. As a net importer of insulation materials, Georgia has potential for import substitution and market development to support a possible growing sector. Yet today, construction companies are not aware of the potential of basalt products in providing energy efficiency and cost effectiveness. Customers are also not aware of the benefits of basalt over fiberglass, nor, is there an incentive for them to replace fiberglass with basalt as there are no construction standards or regulations which influence them to build in a more energy efficient manner.

The challenge of this consultancy is to devise activities to assist growth in this value chain, resulting in increased investment, productivity, employment, revenues and exports.

B. Objective of this Consultancy

The objective of this consultancy is to deliver a comprehensive written basalt products value chains strategy, with the participation of industry stakeholders from both the public and private sectors.

C. Specific Tasks of the Consultant

Under this Scope of Work, the Consultant(s) shall perform, but not be limited to, the specific tasks specified under the following categories.

• Value –added Tasks Related to Accomplishing the Scope of Work’s Objectives. The Consultant(s) shall use his/her education, experience, knowledge of international best practices, and additional understanding gleaned from interviews and readings to accomplish the following:
  • Identification of major end products in the value chain, which have potential for local market development, export and import substitution
  • Familiarization with the basalt products value chain and the stakeholders that comprise them – quarries, processors end users, market linkages, developers, construction companies
  • Host roundtable discussions and focus group discussions with stakeholders to seek input into the Basalt Products Value Chain Strategy
  • Develop a  Basalt Products Value Chain Strategy, based on visits to companies, materials reviewed and interviews held (see below)
  • Provide presentation to stakeholders on the goals and anticipated actions outline in the strategy

The Basalt Products Value Chain Strategy should include the following factors (not necessarily in the order given):

• Assessment of  Basalt products processing and use–e.g. specifications, applications, installation, wholesale and retail markets
• Assessment of skills of value chain personnel (quarries, processors, construction companies, renovators, real estate developers) – processing, storage, installation, management, marketing,
• Assessment of Competitive Position in relation to other regional construction materials processors
• Specific directions on:
  • Research and Development
  • Raw Material Sourcing, Extraction, Processing, Distribution
  • Use of Technology
  • Standards, Certification and Testing
  • Market Development (See below)
  • Information Provision& Market Linkages
  • Domestic and Regional Promotion
  • Investment Required
  • Education & Training Needs
  • Business Development Needs – marketing, management, sales, operations, etc.
  • Public Awareness
• Comprehensive Action Plan providing details on activity, timeframe, responsibility

Under Market Development (above), the consultant will be required to undertake a regional market assessment for Basalt products:

• Identification and profiling of major manufacturing/processing competitors in the region
• Analysis of potential regional export markets, including identification, interviewing and profiling of major buyers
• Assessment of risk of substitution of alternate products
• Collection of information, from different sources, regarding prices for selected materials (together with substitute construction materials) for each value chain within the international market
• Assessment of the opportunity for new market entrants and the success criteria needed, along with determination of the best method of entry into targeted markets

The region (as described above) would comprise the Caucasus, Central Asia, countries bordering the Black Sea, and other destinations to which Georgia is already exporting.

D. Deliverables

The substance of, findings on, and recommendations with respect to the above mentioned tasks shall be delivered by Consultant(s) in a written deliverable.

II. LOE and the Period and Place of Performance

The level of effort (LOE) will be approximate 30 days and will take place in Tbilisi, Georgia.

III. Qualifications of the Consultant

• Education: Relevant academic or professional qualifications relating to engineering, construction or construction materials
• Experience: 10 years of international experience in construction materials consulting
• Special preferences:
  • Prior consulting experience in the region (CIS, South East Europe, Caucasus)
  • Experience in basalt production and processing
  • Knowledge of international buyers of basalt products
  • Firm level consulting to basalt processors

IV. How to Apply

Interested candidates please send a letter of interest and copy of your current resume to recruitment @ jeaustin.com.  Please write in the subject line: Basalt Industry Specialist. Short-listed candidates will be contacted.  Do not contact J.E. Austin staff members regarding this position and no phone calls, please. Open until filled.