REALIZED POTENTIAL
ith Turkey focused on increasing its exports in an effort to boost hard currency receivables and reverse its current account deficit, the mining sector has taken center stage. Still representing a relatively small share of around 2-3% of the economy’s GDP, there is much room to grow.
Sitting on the Tethyan Metallogenic Belt, which runs from Southeast Asia to Southeast Europe, Turkey has a wide variety of mineral resources, including gold and other rare earths, natural stones, chrome, copper, nickel, magnesium, industrial raw materials, lignite, and boron. While natural stones account for around half of Turkey’s annual USD5 billion in mining exports, much new investment is being poured into the sector’s other areas.
Interestingly, Turkey’s mining sector has recently been bucking the trend of international investment and seen a number of domestic conglomerates driving the sector’s growth. While part of this capital movement is due to the perception of mining investment laws, it is also due to the increased capabilities of Turkey’s industrial sector.
Gold is one such area seeing massive development from domestic capital. In the first two decades of the century, Turkey has turned a nearly nonexistent industry into Europe’s largest producer of gold. Tümad Mining Industry and
WTrade, a subsidiary of Nurol Holding, is a prime example of how development in the sector is unfolding. Tümad’s two new mines—one having started production in late 2017 and the other in 2019—are set to produce around 15,000 ounces of gold per month.
Turkey’s nascent coal mining sector is another example of domestic development and is also shaping up to be a successful case of privatization. In late 2018, the government transferred the operating rights of seven high-potential goal fields to private companies, a move that is set to increase annual coal production by 20% to around 100 million tons per year. The move is in part to reduce Turkey’s imported energy sources, on which it is nearly entirely dependent to meet consumption needs.
As raw minerals constitute the majority of mining exports, a number of initiatives are underway to include more of the value chain in Turkey before products are exported. Cengiz Holding’s investments through its mining subsidiary, Eti Bakır, are notable in this area. Cengiz has poured over USD1.2 billion into its integrated metal recycling and fertilizer plant in Mardin—the largest ever private-sector investment in the eastern and southeastern region of Turkey. Plans to invest another USD450 million by 2023 will see the facilities capture more value through additional downstream capabilities. ✖