|
(Last updated: 16 Nov 2010)
Trends and opportunities
The market
Although with its amazing diversity of its industrial mineral deposits and varied base metal reserves, the mining industry in Turkey is still at infancy stage. Over the last 70 years or so, the 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 promis¬ing and dynamic mining destinations, with an increasing number of local and foreign players playing an active role in the market.
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 growing demand for environmental engineering and consulting services for the mining sector.
Statistics from the State Planning Organization demonstrate that the mining sector has experienced heady growth over the last 10 years. In 2008, Turkish mining exports grew by 5.26 per cent in terms of quantity, 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 being 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 government recognises the potential of the mining industry and the new mining code was enacted in June 2004 to encourage the 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.
Many foreign companies took advantage of the investor friendly business environment, there are around 20 to 25 Canadian, US, UK and few Australian companies invested in Turkish mining sector especially in precious metals mining.
Also companies from, Germany, South Africa, Japan, South Korea, Italy, China, Sweden and France are active in Turkey either as suppliers of products and services or direct investors in exploration and mine operation.
In 2008, 643 new mining operations started but also 35 operations were closed down. 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 leading industry of the country. Given this government policy, the Turkish mining industry is expected to remain the most favored industry second to energy.
Turkey is the member of Regional Organization for Economic Cooperation (EIT) 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
There is a high level of appreciation for Australian capability in this sector due to the international profile of companies such as BHP Billiton and Rio Tinto (currently not involved in the Turkish market) 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 for the mining sector.
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 each. 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 Agýdagý 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 skarns, epithermal gold, volcanic-associated massive sulfide (VMS), orogenic gold including listwanite-hosted, and placer gold. There are some known occurrences of deposits that 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 of lignite and 1.3 billion tonnes of hard coal reserves; 1.3 billion tonnes of hard coal reserves belong to Turkish Hardcoal 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
Coal is consumed in four sectors; EUAS production is consumed only for electricity.
75 per cent of TKI production is consumed at power plants and the remainder is consumed for industry and heating.
Australia is one of the major suppliers of coal to Turkey, along with Russia, Canada, the USA, Colombia, South Africa, and China.
Due to the increasing energy need and deficiency of domestic resources in Turkey, coal has been increasing in importance. At the same time, CO2 issues and emission restrictions have become critical.
TKI has been redefining its role to become a clean fuel producer rather than just a mining company, ensuring diversification of primary energy resources, reducing import dependency and increasing share of indigenous resources for supply security. Clean coal technologies and chemical studies will be sped up. A multi-disciplinary environment and close cooperation of the parties is essential for the success.
TKI has accelerated its activities and started projects both in Turkey and abroad. Several agreements with Turkish universities and research institutions have been made on this subject covering characterisation of the production of liquid fuels from coal.
TKI has also started a project to build a pilot plant which has a capacity of 250kg/h. This pilot plant would provide the testing of different types of gasifiers, forecasting problems in later stages of gasification and also training TKI staff on the subject. At the current stage, purchasing the equipment has been completed. This establishment also serves as an R&D center for liquid fuel, methanol and chemical production from coal, electricity production by IGCC, and capturing and storage of CO2.
Turkish Hard Coal Enterprises (TTK) and Turkish Coal Enterprises (TKI) continuously announce tenders on their websites 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). Project development and investment in chromium end-products 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-added 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 two years ago. 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, being the world’s largest borate ore producer, has 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 fulfill 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, General Directorate of Mineral Research and Exploration (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 to upgrade available laboratory technologies and to increase 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
Total drilling for mining exploration projects of the public and private sector totalled:
- 200,000 metres in 2005
- 300,000 metres in 2006
- 500,000 metres in 2007
Private and public sector activities each make up about 50 per cent of these amounts.
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-quality and costlier Australian products.
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)
- 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’s (Toronto, Canada)
- EUROPEAN Nickel (UK)
- EURASIAN Minerals Inc. (EMX) (Canada)
- Chesser Resources (Australia)
|