Mining to Turkey
(Last updated: 3 Dec 2012)
Trends and opportunities
The market
Despite Turkey’s amazing diversity of industrial mineral deposits and varied base metal reserves, the mining industry is still in its infancy. Over the last 70 years or so, the mining industry has grown rapidly, particularly after 1993, due to constantly increasing domestic and world demand. Turkey now ranks as one of the world's most promising and dynamic mining destinations, with an increasing number of local and foreign participants playing active roles in shaping the growing market.
Major opportunities exist in upgrading facilities for mining coal, zinc, copper, gold and silver, as well as for iron ore, bauxite lead and nickel.
There is growing demand for environmental engineering and consulting services for the mining sector.
Statistics from the State Planning Organization demonstrate mining has experienced heady growth over the last 10 years. In 2008, Turkish mining exports grew by 5.26 per cent by volume, reaching up to 16.3 million tonnes and in terms of value it grew 19.33 per cent reaching US$3.24 billion. The GNP share of the mining sector in Turkey stood at two per cent valued at US$2.6 billion.
Turkey has a large and diverse mineral resource base. The country possesses an estimated 2.5 per cent of the world’s industrial minerals resources, including some 60 per cent of global borax resources, 20 per cent of bentonite and more than 50 per cent of perlite. The main products in the minerals sector include:
- natural borates and concentrates
- natural stone
- ferrochromium
- chromium ores
- copper ores
- magnesite
- zinc ores
- feldspar
- pumice stone
- kaolin
- other clays
More than 50 different minerals are currently produced.
The Turkish Government recognises the potential of the mining industry and the new mining code was enacted in June 2004 to encourage development of the sector. In 2005 there was a significant increase in mining exploration, production, and mine operation, and this trend will continue with more fixed capital investments expected over the coming years.
As many as 20 to 25 foreign companies now operate in the investor friendly business environment. Entrants from Canadian, US, UK and a few Australian companies have invested in Turkey’s mining sector, many of them focusing on precious metals. Companies from, Germany, South Africa, Japan, South Korea, Italy, China, Sweden and France are also active in Turkey, either as suppliers of products and services or direct investors in exploration and mine operation.
The new Mining Law implemented in 2005 has improved the investment environment and has greatly increased the number of mining exploration licenses in the country. The vibrant Turkish mining sector offers not only investment opportunities but also an export market for Australian equipment and services.
The priority of the Turkish Government is to encourage private investment and develop the mining sector as the country’s leading industry. Given this government policy, the Turkish mining industry is expected to remain the most favoured industry second to energy.
Turkey is the member of Regional Organization for Economic Cooperation between Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Uzbekistan, Pakistan, Tajikistan and Turkmenistan. This link with other countries in the region provides opportunities to Australian firms to partner with Turkish companies in numerous sectors in these countries, including mining.
Opportunities
Australian capability is well regarded due to the international profile of companies such as BHPB and Rio Tinto and our supply of mineral commodities to world markets such as iron ore and coal to many Middle East North Africa markets including Turkey. This is being effectively leveraged to market mining products, technology and services to Turkish mining operations especially for aspects of quality control, environmental and production efficiency gains.
Major opportunities exist in upgrading facilities for mining coal, zinc, copper, gold and silver, as well as for iron ore, bauxite and lead and nickel. There is also growing demand for environment engineering and consulting services.
Specific business export and business opportunities in Turkey’s mining sector include:
- exploration and development of base metals
- coal production
- development of value-added chromium
- magnesite and boron end-products
- technology upgrade of copper, bauxite and zinc-lead smelters
- washing and briquette production
- clean burning technologies
Gold
Over the past two decades there has been intensive gold exploration by foreign metal companies in Turkey and almost 60 per cent of the country is suitable for gold exploration. Several small and two large gold deposits have been discovered containing more than 100 tonnes of gold reserves. The Ovacik mine located near Izmir was the first gold mine operated in Turkey by Normandy of Australia starting in 2001. The current operator, Koza Altin, bought the mine in March 2005.
Other gold projects include Anatolian Minerals’ Erzincan–Cöpler, Koza’s Gümüþhane-Mastra, Eldorado’s Kisladag and Efemçukuru near Izmir and Usak respectively, and Teck Cominco’s/Fronteer’s joint venture Agidagi near Canakkale. Investments in exploration and development, and supply of mine and process equipment, are the main opportunities for foreign firms.
Turkey possesses a wide spectrum of gold deposits including porphyry gold (Cu–Mo), gold in skarn, epithermal gold, volcanic-associated massive sulphide (VMS), orogenic gold including listwanite-hosted, and placer gold. There are some known occurrences of deposits which are potentially of Carlin-type, detachment-fault-related gold-type, iron-oxide copper-gold (IOCG), and gold in carbonate replacement and Mn-deposits, which could become exploration targets. Most of porphyry and VMS gold deposits vary from gold-only systems to by-product gold systems.
Base metals
In addition to gold, the exploration and development of base metals in the Black Sea and Aegean Regions, which have not yet been greatly explored, offers good potential. Approximately 20,000 concessions are currently on offer to private investor and mining companies from the Turkish Mining Affairs General Directorate (MIGEM).
Coal
Turkey has approximately 11.6 billion tonnes lignite and 1.3 billion tonnes of hard coal reserves; 1.3 billion tonnes of hard coal reserves belong to Turkish Hard Coal Enterprises (TTK) and lignite reserves are divided as below:
- Turkish Coal Enterprises (TKI) – 2.5 billion tonnes
- Electricity Generation Company (EUAS) – 4.8 billion tonnes
- Private Sector – 1.7 billion tonnes
- General Directorate of Mineral Research Exploration (MTA) – 2.6 billion tonnes
TKI will initiate core drillings to expend 9.3 billion tonnes of already proven coal reserves as well as explore for new deposits between now and 2020. The drilling will mainly concentrate in the Afşin-Elbistan coal deposit (Kahramanmaraş province). At least 250 million m3 of excavation are done each year for TKI by private sub-contractors. Canada is a major supplier of coal to Turkey along with Russia, the USA, Colombia, South Africa, Australia, and China.
TKI and Turkish Hard Coal Enterprises (TTK) continuously announce tenders on their web sites (www.ttk.gov.tr and www.tki.gov.tr) for mining and machinery requirements and excavation. Examples of tenders expected in the near future include: issuance of coal mining licenses owned by State Coal Enterprises (TTK and TKI) and a call for tender to purchase loaders and excavators. TKI plans to carry out a feasibility study on the establishment of coal liquefaction projects in Turkey and there are opportunities for the supply of liquefied coal and coal-to-oil refinement technologies and equipment as well as investment in these facilities.
Chromium
Turkey’s annual production capacity of over one million tonnes of chromium ore makes it a leading world producer. Two ferro-chrome facilities located in Elazig and Antalya are purchasing raw materials from domestic sources, and other facilities are importing chemical quality chromite to produce chrome-chemicals, including the firm Kromsan in Mersin, a subsidiary of Türkiye Is Bankasi (Is Bank). Despite Turkey’s production capacity, imports of chromium ore have reached 100,000 tonnes in some years. Project development and investment in chromium end-products, especially stainless steel and various chromium alloys, are the main opportunities for foreign companies.
Iron
Turkey is currently in need of about eight million tonnes of iron ore containing 58-65 per cent iron-oxide. While there are many iron ore deposits in Turkey containing 12-15 per cent iron-oxide, almost 80 per cent of iron-oxide is imported, mostly from Brazil. Opportunities include exploration and development, processing technologies, and preparation of feasibility studies.
Magnesite
Magnesite is an important export for Turkey and the bulk of ore production is carried out by small private enterprises. The largest producer, Kutahya Magnesite A.S., is the largest producer of dead-burned magnesite and refractory bricks in the country and exports some of its production. Foreign companies can consider investing in the production of magnesite end-products to increase Turkey’s value-add in this area.
Marble-dimension stone production
Turkey is in need of hi-tech production equipment and services for marble cutting and polishing to cut down on its production costs and to improve quality in order to compete with low cost competitors. Due to increasing demand for Turkish marble in foreign markets and high domestic consumption of marble resulting from developments in the construction industry, modern technologies have been introduced to meet this quality and demand. Although there have been great improvements in both quality and quantity of production, there is still potential for investors to improve technologies used. The market is mostly dominated by small private companies, with the recent emergence of some large companies in this field.
Copper and bauxite smelters
CE-KA owns the only copper smelter located in Samsun, which was privatised by state-owned Karadeniz Bakir. CE-KA also owns the only alumina smelting facility in Seydisehir, which was privatised by state-owned ETI Mine in 2004. The smelter uses bauxite ore from its own mine located nearby. Copper and bauxite mines and smelters in Turkey are seriously in need of modern technology and management skills, offering opportunities for both local and foreign firms.
Lead-zinc smelting Facilities
Although Turkey has good potential for extraction of high sulphide and oxide lead-zinc, there are no treatment facilities in the country. The only zinc production facility owned by the state, Çinkur, which utilises oxide-ore, was closed down due to exhaustion of ore from nearby mines. Cayeli Bakir Isletmeleri, a subsidiary of Canadian Inmet Mining Co., produces copper and zinc concentrate. Turkey’s potential for producing sulphide and oxide zinc creates an opportunity for establishment of a zinc smelter located in central Anatolia or the Black Sea coast.
Boron
Turkey is the world’s largest borate ore producer with, considerable capacity to produce refined borates. About 92 per cent of borate production is exported worldwide and around eight per cent is utilised domestically. Turkey’s mining legislation (Law No. 2840 issued in 1983) gives exclusive rights to the State for exploration and exploitation of boron, with state-owned Eti Mine Enterprises being the only boron producer in the country. The largest share of the company’s boron production is exported as lump ore or concentrate, while a lesser amount is converted to refined boron products such as borax decahydrate, borax pentahydrate, boric acid, ground colemanite and sodium perborate.
Turkey’s Boron Research Institute is aiming to organise and sponsor scientific studies to widen and diversify the use of boron in the production of end-products, and local and foreign investors are encouraged to invest in the development of these technologies. Technology development for recovering by-products of boron, such as clay, zeolite and other raw materials, is also ongoing, which provides opportunities for partnering and investment.
Services
Demand for services includes process development, process-control, chemical and metallurgical analyses, reserve estimation and underground mining operation. Foreign mining companies operating in Turkey, listed on international stock exchanges, also require specialised auditing services to fulfil local accounting and compliance requirements.
Laboratory services
Demand for laboratory services in Turkey includes:
- chemical analyses and instrumental chemistry
- mineralogy
- petrography
- ore process
- metallurgy
- solid fuel analyses and testing
- rock and soil mechanics tests
These services are currently performed by state organisations such as university labs, MTA, and The Scientific and Technological Research Council of Turkey (Tübitak) as well as by representative offices of the private firms ALS-Chemex and ACME. Increasing demand for laboratory services resulting from Turkey’s compliance with new EU regulations and laws, as well as strengthening of the Government’s monitoring and supervision role, opens new opportunities for foreign firms. These include upgrading available laboratory technologies and increasing Turkey’s overall capacity to provide high quality and efficient laboratory services. Development of laboratory accreditation in Turkey is another priority initiative for which Australian firms can supply consulting services or new investment.
Drilling
There is an absolute demand for drilling equipment and services and MTA often calls tenders for drilling machines and spare parts. Australia has a competitive advantage due to its know-how in manufacturing semi-mechanic, robust drill machines. Due to lack of capital, Turkish drilling companies are forced to buy cheap but poor drilling machines; however, availability of suppliers’ credits may help facilitate sourcing of higher-value Australian products.
Barriers
One major issue in gold mining in Turkey is the reaction of environmental activities on the subject of cyanide leaching. Rallies have been organised against gold mining and some companies, while insisting they have been operating in accordance with all Turkish laws and regulations, have been sued with the allegation that they do not comply with environment standards, and that they have submitted impartial environment impact studies. Environmental activists have also obtained court injunctions for mine operations. While these obstacles may be relatively easy to overcome, in some cases they become serious challenges for the companies involved.
The Turkish market requires long-term commitment and cooperation with local partners and a network of contacts both in the public and private sector. In this respect, periodic visits and participation to local trade fairs are particularly important for successful market entry. To be successful in Turkey, it is recommended Australian companies have a local representative or liaison office to enter the market. As business develops, companies can open up subsidiaries.
Competitive environment
The Turkish mining industry is typically dominated by foreign investors and suppliers of equipment and services.
Leading mining companies active in Turkey are:
- Eldorado Gold (Canada)
- Teck Cominco Ltd, (Vancouver Canada)
- Rio Tinto Plc (London, UK office)
- FRONTEER Development Group Inc (Vancouver, Canada)
- ARIANA Resources (UK)
- Stratex International Plc (London, UK)
- Mediterranean Resources (Australia)
- Nuinsco Resources Ltd. (Toronto, Canada)
- Silvermet Inc. (Toronto, Canada)
- Inmet Mining (Canada)
- ODYSSEY Resources Ltd. (Toronto, Canada)
- EUROPEAN Nickel (UK)
- EURASIAN Minerals Inc. (EMX) (Canada)
- Chesser Resources (Australia)
- Alacer (Australia)
Tariffs, regulations and customs
The General Directorate of Mineral Research and Exploration (MTA) is the state agency responsible for undertaking mineral exploration, assessing the country’s mineral resources and developing the mining sector. The MTA also has a remit to educate engineers and assist personnel involved in the minerals sector.
In addition to its mineral research projects, the MTA is also tasked with various other studies, including geological and geophysical mapping, geochemical surveys, remote sensing, hydrogeology, geothermal investigations and seismic studies.
The public sector dominates in mining activity for lignite, hard coal and borate, including medium- and large-scale companies such as Turkish Hard Coal Enterprises, Turkish Coal Enterprises, Electricity Generation Inc. and Eti Mine. The public sector owns 54 per cent of the country’s total licensed area. This share is expected to diminish with future privatisations and many metallic mines such as chromium, aluminium, copper and silver, which were mostly state-owned in the past, but now privatised.
The private sector, conversely, dominates the country’s industrial minerals and metals sectors. Private sector enterprises consist of exploration and operating companies owned by domestic and foreign investors and small and medium- sized family-owned local mining companies. While the public sector has traditionally been the largest buyer, the private sector is rapidly becoming the main player in the Turkish mining industry and the largest buyer of equipment and services.
Regulatory environment
Under Turkey’s mining regime, ‘underground resources’ are subject to the exclusive ownership and disposition of the State and are not considered a part of the land where they are located. Under the mining legislation, the State delegates its right for exploration and operation to individuals or companies for specific periods by issuing licenses subject to royalty payments to the state.
Turkey’s mining regime is mainly governed by the Mining Law No 3213 of 1985, amended by Law No 5177 of June 2004 to provide foreign as well as local investors with a more investment-friendly environment. The implementation regulation of the new Mining Law, enacted in February 2005 has created a liberalised business environment for the mining industry. The law entitles investors with various incentives and facilities such as simplified bureaucracy in obtaining permits, operation of the mines and repatriation of earnings. The law makes no discrimination between Turkish and foreign companies.
Only Turkish citizens and the companies established under Turkish laws specifically for mining purposes are entitled to hold mining rights. Foreign capital companies established in Turkey for mining purposes are entitled to hold mining rights as they are deemed Turkish companies.
The General Directorate of Mining Affairs (MIGEM), a division of the Turkish Ministry of Energy and Natural Resources, is the authorised body which regulates mining activities and issues mining licenses in Turkey. Environmental regulations related to mining activities fall under the jurisdiction of the Ministry of Environment and Forestry. The mining law stipulates that, upon submission of the Environment Impact Statement (EIS) to the Ministry of Environment and Forestry, Environmental Impact Assessment (EIA) procedures shall be completed by the Ministry of Environment and Forestry within three months. Other procedures related to permits to be granted by other relevant institutions must also be completed in parallel to the EIA.
Tax reforms
Judicial reforms being implemented in Turkey are improving legal procedures in order to hasten court decisions, improve transparency and increase the system’s overall organisation and efficiency. Tax reforms have resulted in the lowering of the basic corporation tax rate from 30 per cent to 20 per cent in 2006. Personal income tax rates range between 15 per cent and 35 per cent. The Turkish Government plans to further simplify the bureaucracy for licensing by revising Ministry of Environment and Forestry mining related legislation again in 2007. In 2006, Turkey established a new Investment Support and Promotion Agency, similar to that of most EU and OECD countries. The agency provides useful information on the business and investment environment. More details are available at www.investinturkey.gov.tr.
Designation of the Ombudsman Law No. 5548 was enacted in September 2006, which will establish an ombudsman’s office in Turkey to inspect and investigate complaints towards, and propose suggestions to, Government administration regarding commercial matters.
Free trade zones
Turkey has numerous free trade zones considered to be outside the jurisdiction of Turkish Customs authorities. Goods can be imported duty-free, assembled, manufactured, stored, repackaged and re-exported without paying tariffs. For more information on Turkey’s duty free zones visit www.dtm.gov.tr.
Although not a major impediment in doing business in Turkey, lack of a double taxation agreement between Australia and Turkey is an issue to be resolved by Australian companies incorporated in Turkey.
Links and industry contacts
Mining-related resources
Investment Support and Promotion Agency of Turkey – www.investinturkey.gov.tr
Turkish Ministry of Energy and Natural Resources – www.enerji.gov.tr
Turkish Republic Ministry of Energy and Natural Resources – General Directorate of Mining Affairs – www.migem.gov.tr
Mineral Research and Exploration General Directorate
Tel: +90 312 287 34 30
Fax: +90 312 287 91 88
Email: mta@mta.gov.tr
Events
23rd World Mining Congress & Expo – www.imcet.org.tr/defaulten.asp
Eurasia MENA Mining Summit – www.ebyintl.com
Mining, Natural Resources and Technology Fair (MINEX) – http://minex.izfas.com.tr/
Turkey Mining 2012 – www.imcet.org.tr/defaulten.asp
Turkey Mining Show 2013 – www.terrapinn.com
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.