TURKEY: A MINERAL RICH COUNTRY
Turkey has a very large and diverse mineral resource base. The country lies at the easternmost end of the Alpine orogenic belt, and its territory is a part of the Alpine-Himalayan orogenic system that extends from Europe to Asia. Turkey is home to 2.5% of the world’s industrial mineral resources and produces around 60 different metals and minerals. Copper, gold, iron lead, mercury, silver, tin, and other metals have been mined since ancient times.

Turkey's main minerals comprise borax ores, bentonite, perlite and some metallic ores such as iron, bauxite, chromite and gold. A high level of lignite production is also present in Turkey. Turkey's iron and steel industry is currently ranked twelfth in the world.

Turkey possesses an estimated 60% of global borax reserves. Exports of natural stones such as marble have also increased substantially in recent times. Other significant mining activities include magnesite, copper, zinc ores and feldspar. Recent exploration activity has also indicated increased reserves of gold and coal.

Turkey offers a prospective geography, improved infrastructure, stimulating environment, technology, a strong local mining sector and a well-educated workforce. It is probably the best place to explore in Europe; highly prospective and under-explored. Recently a huge number of world-class mining companies are coming to do business in Turkey. And yet, they had significant gold and other base metal discoveries.
Total foreign investment in mining was 1,5 billion USD in 2006 and exceeded 1,7 billion USD in 2007.



TURKEY’S NEW MINING REGIME
Exploration activity for base and precious metals in Turkey has been stepped up as a result of favorable changes in the country’s mining and investment laws. Turkey has amended its principal mining legislation in 2004. This new legislation has eased the licensing procedures and done away with unnecessary bureaucratic controls. Environmental assessment guidelines and license fees have also been changed to attract foreign investment. Meanwhile the government continues to reduce its ownership in state-owned mining operators, creating a more investment-friendly environment.

Due to the new legislation, 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 long as they are deemed Turkish companies.

The New Law, in general, aims to reduce the heavy bureaucratic control imposed upon the licence-holders, shorten and ease the permitting process, reduce the fees to be paid by licence holders, and, most importantly, remove the limitation of mining activities on certain types of lands.

Under Turkey’s mining regime, ‘underground resources’ are subject to the exclusive ownership and disposition of the State and are not considered part of the land where they are located. Under the mining legislation, the State delegates its right to explore and operate the mines to individuals or companies for specific periods by issuing licences subject to payment of a royalty to the State.

MIGEM (General Directorate of Mining Affairs) is the authorized institution to regulate mining activities and issue mining licenses.

The new mining law comprises 5 different groups of minerals:

1st Group: Sand – gravel
2nd Group: Marble
3rd Group: Salts in solution form that can be obtained from spring waters, lake and sea.
4th Group: Energy, metal and industrial minerals
5th Group: Precious metals and gem stones.

Multiple licences involving different categories of minerals in the same area are allowed. A royalty of 4% of the sale price for the groups 1 and 5, 2% for the other groups has to be paid to the state. The royalty amount to be with respect to the mining activities realized on state-owned lands is 30% more. If the state-owned land has also a forest status and is more than 5 hectares, licence-holders have to pay forest fees subject to the decision of the Forest General Directorate of the Ministry of Environment and Forest without paying the additional 30%.

There are two types of licences: exploration licence and operation licence. Licences become valid in the date of registration to the Mining Registrar. And the right of priority in licence applications is determined according to the date of application.
The exploration licence grants  the right to explore on a determined land. The exploration licence is granted following the submission of the necessary documents, licence fee and licence guaranty fee within 15 days following the application. The exploration licence is granted for 3 years which can be extended up to 5 years for Group 4 minerals.

The operation licence grants  the right to operate the mine. The exploration licence-holder has to apply for an operation licence before the end of the term of exploration licence. The term of operation licence is at least 10 years, which can be subject to an extension. A great advantage of the Turkish mining industry is The Turkish VAT Law. This law was  amended to exempt the gold mining industry (producers of gold and/silver in Turkey) from paying VAT on their activities including exploration, construction, purchase of equipment, mine operation, smelting and refining. The amended VAT Law makes Turkey consistent and competitive with other countries in its treatment of VAT by reducing the cost of mine construction and production of precious metals.

The VAT Law states that: "deliveries of goods and services to the explorers, operators, smelters and refiners of precious metals, such as gold and silver, are exempted from VAT". Therefore vendors will not charge VAT on their invoices for the goods and services they provide.

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