Insight - Demand for METS rises in Turkey as precious metals mining sector grows

Investment in Turkey’s precious metals mining sector is set to increase rapidly, following a series of government announcements and corporate acquisitions.

  • The Turkish Government aims to double gold production in the next five years
  • The Turkish sovereign wealth fund (TWF) has acquired 20 new precious metals and launched a series of drilling and exploration projects.

The decision to increase mining investment via the TWF creates new opportunities. Austrade has identified the potential for Australian METS companies in feasibility studies, project management, engineering reviews, mining design, risk management and safety initiatives.

The demand for mining-related environmental services is also rising. This is because mining-related pollution is a growing political issue in Turkey.

For more information, please contact our Istanbul-based specialist, Tibet Kara.

Minister wants gold output to double

Turkey is a new-comer to gold mining. While no gold was mined in 2000, Turkey now produces more gold than the entire European Union.

Despite Covid-19-related shutdowns, Turkey's gold production reached a record 42 tonnes in 2020.

In January, the country’s energy minister, Fatih Donmez, said he wanted Turkey to become one of the top-ten gold producing countries in the world. He said the government aimed to increase production to at least 100 tonnes in the next five years.

This strategic goal implies a doubling in output. It also implies the opening of new gold mines. To fulfil this goal, the industry will need to access a wide spectrum of mining-related technologies and expertise, from exploration drilling to mining design and environment-management plans.

Currently, there are just 18 operational gold mines in Turkey. The industry employs 13,200 people.

Increased investment in gold

Confidence in Turkey’s gold mining industry appears high. According to Hasan Yucel, President of the Turkish Gold Miners Association, the sector has so far attracted US$1.5 billion of investment in mineral exploration, and US$6 billion of investment in facilities.

The Turkish Government is also supportive. Mr Yucel reported that Turkey's Energy Ministry had recently introduced changes to the new mining law to improve transparency. The law covers the guidance and administration for exploration and production licenses, planning and public funding.

Precious metals a focus for state investor

Turkey’s wider precious metals sector also looks set for expansion. This is because the Turkish Government wants to reduce dependence on imported precious metals, and it can use TWF – the national wealth fund – to help develop new prospects.

The TWF was created in 2016 to help develop the country’s international economic objectives. Currently worth US$35 billion, the TWF has interests across Turkey’s financial, energy and logistics sectors. Approximately 9% of its value is invested in mining, principally through TVF Maden Mining.

TWF acquired 20 precious metals mines at the beginning of 2020 as part of a plan to establish a large metal holding company. Since then, TVF Maden has launched a number of new mining projects. Mineral exploration and drilling activities are already underway.

The Turkish Government wants to reduce imports of precious metals. Turkey currently imports large amounts of iron ore, gold, coal, copper, aluminium

Coal and lithium projects trigger demand for METS

Two major projects are under way that could have potential for Australian METS input.

  • A large lignite deposit – Afşin-Elbistan C – which is in Kahramanmaraş province, southern Turkey. Output will be fed into domestic electricity generation. This is a TVF Maden project.
  • Turkey’s first lithium production plant, in Eskişehir Province, in western Turkey. This was inaugurated by the TWF-owned mining and chemicals company, Eti Maden. The plant will produce lithium from the liquid waste generated during boron production.

The lithium plant is expected to lower Turkey’s lithium imports by $20 million a year.

According to Mr Yucel, who is also CEO of TVF Maden, the new precious metals projects require a range of new capabilities. Austrade advisors in Istanbul say Australian METS are well-placed to deliver some of them, which include:

  • Compliance reporting based on JORC standards and UMREK (National Resources and Reserves Reporting Committee of Turkey) standards
  • Feasibility studies
  • Project management studies for exploration programs
  • Independent engineering reviews
  • Ventilation and mine-design studies
  • Risk Management
  • General training programs including for mine safety

Environmental services are also in demand. This is because mining has been subject to protests.

Australia well-placed to deliver services

The Turkish mining industry recognises Australian mining technology and expertise, and it has demonstrated a readiness to learn from the Australian experience. Previous Austrade missions have identified significant opportunities in upgrading existing facilities and consultancy.

Australian METS have particularly strong credentials in relevant fields, including mine safety, mine planning, project management, coal-bed methane drilling, and extraction services. Opportunities also exist in the acquisition of specialised equipment used in underground and open-cut mine operations.

There are currently a large number of foreign-owned mining companies operating in Turkey, including Cayeli Bakir, Tuprag and Aldridge.

Large Turkish mining companies are already using Australian technology and services or employing Australian mining professionals. Examples include Tumad, Yilmaden, Eczacibasi Esan, Lidya, Demir Export and Ilbak. These companies are likely to be receptive to innovative mining products and relevant expertise from Australian METS companies.

For more information

Austrade has mining specialists in Istanbul who understand Turkey’s mining industry and are able to help with enquiries.

For further information, please contact: Tibet.Kara@austrade.gov.au