Subsoil and mining licensing in Georgia under the Law on Promotion and Guarantees of Investment Activity — practitioner checklist

Foreign investors acquiring subsoil use rights in Georgia must satisfy a layered licensing regime before any extraction activity may lawfully begin. Georgia's regulatory framework for natural resources combines sector-specific subsoil legislation with the investor protection architecture established under the Law on Promotion and Guarantees of Investment Activity, and the interaction between these instruments determines both the procedural path to a licence and the substantive protections available once a licence is granted. For companies accustomed to CIS-region mining regimes or Western European concession frameworks, Georgia's approach contains several features that are easily overlooked at the due diligence stage — and that can delay or jeopardise a licence application if not addressed in sequence.

This checklist sets out the five principal steps a foreign investor or its counsel must complete before commencing subsoil use in Georgia. It draws on the structure of the Law on Promotion and Guarantees of Investment Activity as the overarching investor-protection instrument, and addresses the specific procedural requirements of Georgia's subsoil licensing process from the perspective of an inbound operator.

The first and most consequential step is to determine precisely what category of subsoil use is contemplated. Georgian subsoil legislation distinguishes between prospecting (exploration), extraction (exploitation), and combined prospecting-and-extraction licences. Each category carries different documentation requirements, different duration limits, and different grounds for the licensing authority to exercise discretion.

Foreign investors frequently enter the process having conflated prospecting rights with extraction rights, or having assumed that a prospecting licence automatically converts to an extraction licence upon discovery of a commercially viable deposit. Neither assumption is correct under Georgian law. A separate application is required for extraction, and the substantive criteria the licensing authority applies at the extraction stage are materially more demanding than those applied at the prospecting stage.

The type of mineral resource also affects which regulatory authority has jurisdiction. Certain categories of strategic mineral resources are subject to oversight by national-level bodies, while other categories fall within the competence of local self-government authorities. Misidentifying the competent authority at the outset leads to wasted procedural time and, in some cases, to applications that are formally inadmissible.

Practical note: obtain a formal classification of the target mineral resource and the proposed subsoil use category from a Georgian-qualified adviser before preparing any application materials. This step typically adds two to three weeks to the pre-application phase but eliminates the risk of submitting to the wrong authority.

Note: Applications submitted to an authority without competence are not automatically redirected. They are returned without substantive review, and the applicant must re-submit to the correct authority from the beginning. Where licence terms are time-sensitive — for example, where a preliminary transaction has a long-stop date tied to regulatory approval — this error can be commercially material.

The Law on Promotion and Guarantees of Investment Activity is the foundation of Georgia's foreign investment framework. It applies to foreign natural and legal persons making qualifying investments in Georgia and provides, among other things, protections against discriminatory regulatory treatment, guarantees regarding the repatriation of profits, and — critically for subsoil investors — a stabilisation mechanism that limits the adverse impact of subsequent legislative changes on a licensed investment.

A foreign investor who fails to formally establish its status under this law before applying for a subsoil licence forfeits, in practical terms, the procedural and substantive advantages the law provides during the licensing process. The stabilisation provisions are particularly relevant: if Georgian subsoil legislation or tax rules change adversely after a licence is granted, an investor who has correctly invoked the Law on Promotion and Guarantees of Investment Activity may be entitled to continued application of the regulatory regime in force at the time of the original investment commitment.

The steps to establish investor status are distinct from the subsoil licence application itself. They involve confirming that the proposed investment meets the qualifying threshold, structuring the investment vehicle correctly, and in some cases registering the investment with the relevant Georgian authority. The interaction between the investment protection framework and the subsoil licensing process requires coordination between corporate structuring counsel and regulatory counsel — a distinction that not all investors appreciate until they have already begun the licence application.

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Note: The stabilisation benefit under the Law on Promotion and Guarantees of Investment Activity is not automatic. It requires affirmative steps by the investor. An investor who has already obtained a subsoil licence without establishing its protected status under the law cannot generally retrofit protection retroactively. The window for establishing protected status is the pre-grant period.

Georgian subsoil licensing applications require a defined set of documents, and the licensing authority exercises limited discretion to accept incomplete submissions. The core package typically includes evidence of legal standing (constitutional documents and ownership structure of the applicant entity), a technical programme describing the intended subsoil use activities, evidence of financial capacity sufficient to carry out the programme, and — for extraction licences — a resource estimate or geological report prepared to a standard acceptable under Georgian regulatory practice.

Foreign companies must additionally provide legalised or apostilled corporate documentation, certified translation into Georgian, and evidence of registration or establishment of a Georgian presence where the licensing rules require a locally registered entity to hold the licence. The requirement for a local licence holder is a point that frequently requires structural adjustment by foreign investors who have initially assumed that a foreign parent company may hold Georgian subsoil rights directly.

The technical programme is not a formality. The licensing authority reviews it for consistency with the declared subsoil use category, the location of the licence area, and the applicable environmental standards. A programme that is technically adequate by international industry standards may nonetheless require revision to conform to the format and content expectations of Georgian regulatory practice.

Practical note: engaging a Georgian-qualified technical consultant alongside legal counsel — rather than relying on in-house technical expertise — significantly reduces the risk of requests for supplementation that extend the review timeline.

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Environmental assessment is a mandatory pre-condition for subsoil licences across all extraction categories in Georgia. The licensing authority will not issue an extraction licence — and in many cases will not accept a combined prospecting-and-extraction application — without satisfactory completion of the environmental impact assessment (EIA) procedure.

The EIA process in Georgia involves a screening determination, preparation of an impact assessment report, a public consultation stage, and a decision by the environmental regulatory authority. The timeline for completion of a full EIA is not fixed by statute and depends on the complexity of the project and the adequacy of the submitted documentation. In practice, for medium-complexity extraction projects, the EIA process adds between four and eight months to the pre-licence timeline. Investors who build their project schedules on the assumption that EIA and licence application can proceed simultaneously, or that EIA will be completed in less than four months, frequently encounter timeline overruns.

The social impact dimension — community consultation requirements, resettlement obligations where applicable, and engagement with local self-government bodies — is distinct from the formal EIA process but must be addressed in parallel. Inadequate community consultation has been a ground for challenge to extractive licences in Georgian administrative proceedings, and investors who have not documented their consultation process adequately are exposed to third-party objection after licence grant.

Note: An EIA decision that was obtained on the basis of materially incomplete or inaccurate information about the proposed subsoil use activities may be challenged by third parties or revisited by the environmental authority. Investors should ensure that the EIA documentation accurately describes the full scope of intended extraction activities, including any planned expansion phases, rather than understating scope in order to minimise initial assessment complexity.

Obtaining a subsoil licence is not the conclusion of the regulatory process — it is the beginning of an ongoing compliance relationship with the licensing authority. Georgian subsoil licences carry active post-grant obligations, the breach of which may result in suspension or revocation.

The principal ongoing obligations for extraction licence holders include: adherence to the approved technical programme (material departures require prior regulatory approval), payment of subsoil use fees on the schedule specified in the licence, compliance with environmental permit conditions, and submission of periodic reporting to the licensing and environmental authorities. Licence holders must also notify the authority of changes to corporate structure or ownership that affect the licensed entity — a requirement that intersects directly with the rules on foreign investment notification under the Law on Promotion and Guarantees of Investment Activity.

Grounds for licence suspension or revocation typically include non-payment of subsoil use fees, failure to commence licensed activities within the period specified in the licence, material departure from the approved technical programme without authorisation, and breach of environmental permit conditions. Some of these grounds require prior notice and an opportunity to remedy the breach; others permit immediate suspension. Understanding which category each breach falls into is essential for managing regulatory risk during operations.

For investors who have correctly established protected status under the Law on Promotion and Guarantees of Investment Activity, certain revocation grounds may be subject to challenge on investor-protection grounds. However, this protection does not extend to revocation for non-payment of fees or fraud — it is most relevant in the context of changes to the regulatory framework that retroactively impose new conditions on an existing licence.

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Q: What is the Law on Promotion and Guarantees of Investment Activity and how does it affect a subsoil licence application in Georgia?

A: The Law on Promotion and Guarantees of Investment Activity is Georgia's principal foreign investment protection statute. It establishes substantive guarantees for qualifying foreign investors, including protections against discriminatory treatment, profit repatriation rights, and a stabilisation mechanism that can shield an investor from adverse regulatory changes after a licence is granted. Its relevance to subsoil licensing is that investors who establish protected status under the law before submitting a licence application may be entitled to continued application of the regulatory conditions in force at the time of their investment commitment, even if subsoil legislation or taxation rules change adversely during the licence period. Establishing this status requires affirmative steps during the pre-application phase and cannot generally be retrofitted after licence grant.

Q: Can a foreign company hold a Georgian subsoil licence directly, or is a locally registered entity required?

A: The requirement for a locally registered entity to hold a Georgian subsoil licence depends on the category of subsoil use and the specific mineral resource involved. For certain categories, Georgian subsoil legislation requires the licence applicant to be a Georgian-registered legal entity, which means a foreign parent company must establish a Georgian subsidiary or branch before applying. Investors who proceed on the assumption that the foreign parent may hold the licence directly, and who submit a licence application in the name of the foreign entity, risk having the application returned as inadmissible. Structural advice at the pre-application stage, covering both the licensing requirement and the tax and corporate implications of different vehicle options, is therefore an essential early step.

Q: What are the main grounds on which a Georgian subsoil licence may be revoked?

A: Georgian subsoil legislation provides for licence suspension and revocation on a defined set of grounds, which typically include: non-payment of subsoil use fees, failure to commence licensed activities within the period specified in the licence, material departure from the approved technical programme without regulatory authorisation, and breach of environmental permit conditions. Some grounds require prior notice and a remediation period; others permit immediate suspension pending investigation. Investors who have established protected status under the Law on Promotion and Guarantees of Investment Activity may have grounds to challenge certain categories of revocation that are connected to adverse regulatory changes rather than licensee breach, but this protection does not apply to non-payment of fees or licence conditions that were in place at the time of grant.

Vetrov & Partners is a Russian boutique law firm established in 2009, recognised by Pravo-300 for eight consecutive years. For cross-border matters involving Georgia, the firm works with contributing regional analysts and trusted local counsel in Tbilisi to provide co-ordinated advice on regulatory licensing, company formation, and investment structuring.

The firm's Regulatory & Licensing practice advises inbound foreign investors on licensing requirements, compliance obligations, and regulatory risk management across CIS and post-Soviet jurisdictions, including Georgia, Kazakhstan, Uzbekistan, and Armenia. Enquiries are handled directly by the responsible lawyer.

Enquiries: info@vetrovpartners.com | WhatsApp / Telegram: +7 (983) 510-38-76 | t.me/vitvetcom

We are a Russian-qualified law firm. For matters governed by Georgian law or requiring local admission in Georgia, we collaborate with trusted counsel in the relevant jurisdiction.

This publication is provided for informational purposes only and does not constitute legal advice under Russian or any other applicable law. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Vetrov & Partners is a Russian-qualified law firm. For matters governed by foreign law or requiring local admission in another jurisdiction, we collaborate with trusted counsel in the relevant jurisdiction. For advice regarding your particular situation, please contact info@vetrovpartners.com.

— Nino Beridze Contributing Regional Analyst — Georgia, Vetrov & Partners vetrovpartners.com/contributions/