Turkey’s mining sector is forecast to be one of the fastest growing in Europe, with the country boasting a “healthy” project pipeline of up to ten new projects, but ongoing political and social unrest has been flagged as a threat to the positive outlook.
Research firm BMI is forecasting average growth of 6.8% a year in Turkey’s mining sector over the next five years, with the country set to outperform all other European countries, except for Finland.
In an ‘Industry Trend Analysis’ report, published on Tuesday, BMI identifies gold and copper as the “clear growth bright spots”, forecasting gold production growth of 4.8% year-on-year between 2017 and 2021.
BMI notes that there are up to seven new gold projectscurrently being developed in Turkey, including Canadian group Centerra Gold’s Oksut openpit mine, which contains reserves of 1.2-million ounces. The European Bank for Reconstruction and Development has provided a $75-million loan for the construction of the mine.
The copper sector is set to benefit from the investment in goldprojects, as they often have the potential to also produce copper. BMI is forecasting copper production growth of 6.8% year-on-year up to 2021.
Much of the mining industry’s success is attributed to amendments Turkey made to its mining legislation in 2010. Under the revised provisions, miners have been given value-added-tax exemptions, customs duty exemptions, an 80% tax reduction rate for certain projects and, in some cases, made exempt from regulatory regulations.
BMI also notes that foreign companies are allowed to own up to 100% of a mining asset in Turkey, which is considered a significant incentive for investment.
However, despite a positive outlook, Turkey is seen as one of the riskiest countries for miners. Turkey scores a low 47.8 out of 100 in the BMI Mining Risk/Reward Index, which puts the country second-to-last in Europe, with the nation only ahead of war-torn Ukraine.
Turkey witnessed a deadly coup attempt in July last year, which a section of the Turkish military launched a cooperated operation in several cities to topple the government and unseat President Recep Tayyip Erdogan. The failed coup, which the government blamed on a Turkish preacher and businessman who lives outside the country, led to the death of more than 240 people and about 2 200 others were injured.
“On top of the political and country risks emanating from the recent coup attempt and the government’s increasingly hard line stance since, Turkey will also suffer from increasing social unrest in the mining sector,” BMI states, citing workers’ unhappiness about privatisation and wage disputes in the coal industry as an example.
Several international mining companies are active in Turkey, including Alacer Gold, Alamos Gold, Ariana Resources, Eldorado Gold, Centerra Gold and First Quantum.
Source: www.miningweekly.com, By: MARIAAN WEBB