SITTING ON A GOLD MINE

Turkey 2020 | MINING & INDUSTRY | INTERVIEW

With around USD25 billion in annual mining imports, it is no wonder the government is drawing up new regulations to incentivize domestic production.

Ali Emiroğlu

New mining regulation passed in 2017 freed up the Ministry of Energy and Natural Resources' approval process to transfer mining licenses to private firms. How will this change in regulation encourage investment?
New regulations will mostly affect projects related to the transformation of coal into energy. Actually, tenders about this were made in Soma and Zonguldak. These will contribute to both the mining and energy sectors by converting and transforming existing idle reserves into energy. Large companies usually get them. Large companies with operations in Soma took them, partially because the government awarded incentives for this. They do not tax this, for example. They also gave incentives on investment, such as the restructuring which affected coal production, mining, and energy, which was a good one. It was an operation for the production of lignite resources in Turkey done according to national energy and national mining policies. We also support this effort as an association.

What progress has been made thus far to develop new lignite and hard coal mines as a result of the regulatory changes?
Turkey normally imports USD4 billion of coal each year, most of which is for energy-oriented power plants. This project is meant to reduce imported coal according to the national energy and national mining policy by substituting domestic resources for it. Some very large coal deposits were found in Alpu in Eskişehir and elsewhere such as Konya. Projects and preparations for these projects are ongoing, and tenders for some of them have already been made. Some of them started operations, too. New production projects still continue, but they have not been finalized yet. Many of them will be in production in 2019 and soon thereafter. There will be an incentive for coal mines and power plants, whose target number we will reach after 2019.

Outside of coal, how have liberalization efforts impacted other mining sectors?
The regulation was not just issued for coal. A special incentive was given for coal, but an incentive for metals was also given, in addition to incentives to support metal mining and the production of metal. There were some serious incentives to build the sector for the end product. The incentive was 50% and was increased to 75% by the 2018 law. They still support it, because Turkey has about USD25 billion worth of imports related to mining. These consist of coal, gold, lead, zinc, and iron ore. There is research related to the reduction of imports and the substitution of domestic mines, which the regulations also include, be it related to gold, coal, lead, or industrial raw materials.

What role does the TMD play in helping shape regulations promoting liberalization and encouraging investment?
Both TMD and other components conducted studies on these issues in which we provide our opinions and suggestions regarding the laws and regulations being made. We present them both to the ministry and the sector, in which we play an active role. We also provide reports, legislative proposals, and regulatory recommendations on these proposals. We take the examples you mentioned earlier on practices of other countries and check if they can be applied to Turkey; if they can, we present them to the Ministry of Energy and Natural Resources, the Ministry of Environment and Urban Planning, and the Ministry of Agriculture and Forestry.

Which mining sectors have been most affected—positively or negatively—by the depreciation of the lira?
Mostly the exporters have been affected. There are two kinds of products in the mining sector in Turkey: those aimed at the export sector and those for the domestic market. We have an export value of USD4.5 billion in total. Almost half of this is marble. The rest of it comes from metal exports and industrial raw materials. The most negatively affected parties are the ones that sell marble or other materials in the domestic market.