republic of turkey prime ministry investment support and promotion agency of turkey ( ispat )

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REPUBLIC OF TURKEY PRIME MINISTRY

Investment Support and Promotion Agency of Turkey(ISPAT)

Turkish Mining Industry

Investment Support and Promotion Agency of Turkey

AGENDA

The Agency

Overview of Turkish Mining Industry

Deep Dive on Priority Minerals of Turkish Mining Industry

New Incentive Regime


Investment Support and Promotion Agency of Turkey (ISPAT)


ISPAT

Attached to the Prime Ministry and reports directly to the Prime Minister

Private sector approach Result oriented Multi-lingual, professional and dedicated project directors ONE STOP SHOP 2 offices (Ankara – Istanbul) Establishment of the Agency in 2007 is a proof for

improvement of the investment climate in Turkey

ISPAT


ISPAT

International representatives network worldwide and strategic partners in Turkey (Embassies, Consulates, Commercial Attaches, NGO’s etc)

The International Network

Investment Support and Promotion Agency of Turkey 6


Turkey’s Potential is:2.5% of the World Reserves of Industrial Raw Materials

0.6% of the World Reserves of Metallic Minerals

2004 2005 2006 2007 2008 2009

138

188236

318

409478

Number of Companies with Foreign Capital in Mining

SOURCE: USGS, MTA

Boron SaltsMarble

Na-FeldsparBentonite

PumicePerlite

Diatomite Barite

ChromiumSilverGold

PhosphateCopper

Iron

72.00%

40.00%

19.14%13.40%

9.74%

8.70%4.81%

4.73%

1.44%1.06%

0.67%

0.57%0.29%

0.03%



2005 2006 2007 2008 2009 2010

2.1812.732

3.528

4.541 4.247 4.493

Mining Sector Imports*U.S $ Million

2005 2006 2007 2008 2009 2010

1.468

2.004

2.6123.119

2.327

3.468Mining Sector Exports*

U.S $ Million

Turkey strong in exports of▪ Gold jewelry

▪ Natural stones and cement

Major trade imbalances in▪ Coal

▪ Copper

▪ Aluminum

2010, U.S. $ billions

*Raw Materials ,Ores and Concentrates+Includes all products in the value chain in addition to ores and concentrates

+

SOURCE: UN Comtrade; EtiBor; McKinsey&Company


Turkish Mining Industry2005 2006 2007 2008 2009 20109.0

5.2

8.1

5.4

-6.9

4.7

Growth of Output in Mining Sector %

2005 2006 2007 2008 2009 2010

5.1666.214

8.105

10.1729.210

10.250

Mining Sector IncomeU.S $ Million

Global Crisis

Current Global Market Size (U.S $Billion)

SOURCE: McKinsey&Company, State Planning Organization


Gold

Turkish gold reserves are around 700 tons (increased from 600 tons over the last 5 years, MTA alone discovered 45 tons in 2009).

Probable reserves estimated around 1,700-6,500 tons1 making up for as high as 1/8th of globally proven reserves.

Overview

1 ODTU metallurgical engineer Ayhan Erler and MTA’s cooperative study concluded 1,700-6,500 tons of gold potential in 580 different locations in Turkey

2005 2006 2007 2008 2009 2010

275

203242

180

53 64

1038 49

142 165

56

Turkey Gold Trade Import ExportTons

2005 2006 2007 2008 2009 2010 2011

58

10 11

1517

24Gold Production of TurkeyTons

+30%

Gold production in Turkey gained momentum following the legislation change facilitating exportation of unrefined gold.

SOURCE: MTA, Istanbul Gold Exchange, McKinsey&Company


Gold Gold reserves

Anatolia Minerals

Koza Gold mine

Eldorado Gold

Potential gold-silver reserves

Turkish Gold Reserves

Ovacık

Masra

Çukuralan and Kaymaz

Efemçukuru

Kışladağ

5

12

47

53

415

Reserve Name

Company Production 2010 Tons

3

4

0

0

10

Reserves 2010 Tons

332

2889

31 15 34 27 18 11 24

Possible Production Sites

Turkey has 700 Tons of proven reserves concentrated in Aegean and Black Sea regions

SOURCE: MTA, Istanbul Gold Exchange, McKinsey&Company


Copper Turkish Copper ReservesOperational Mines

Operable Mines

Downstream industries such as;

Automotive(Expected to grow %11 average and reach up to 23 $ Billion in 2015)

Construction(Expected to grow %7 average and reach up to 79 $ Billion in 2015) will boost Copper Imports.

2008 2009 2010 2011 2015

272 289 332 312

386Thousand Tons

+5%+5%

Copper Imports

168

12642

332

379

5

2010,thousand metric tons

Total domestic refined Copper consumption

Refined Copper import

Secondary production from scrap

Refined in domestic facilities

Exported as concentrate

Concentrate production

Primary Production

Given small refining capacity most of the copper sold as concentrate.

SOURCE: MTA,McKinsey&Company


Turkish Bauxite Reserves

In midstream Turkey has a big gap driven primarily by automotive and construction industries.

878150

665

63

Net importsSecondary (scrap to aluminum players)

Primary (Seydişehir)

Mid-stream production by Aluminum source 2010, thousand metric tons

-1.6

Bauxite mining + alumina refining Aluminium

smelting

Semi production

0.025 1.0

MidstreamUpstream Downstream

1.0

Net Trade

2010, U.S. $ Billion

Aluminum

SOURCE: MTA,McKinsey&Company


2003 2004 2005 2006 2007 2008 2009 2010

27 61104 120

253

498

268

475

Chromium

Turkey has %6 of world production.

Worlds 3rd chromite exporter with %12.8.

Turkish Chromium Reserves

2003 2004 2005 2006 2007 2008 2009

5041.168

1.620 1.849

3.639

5.100

6.240

+1148%

Thousand tons U.S. $ Million

Chromium Production

364575

8471.079

1.3821.816 1.746

2.258Thousand tons

Chromium Export

SOURCE: MTA, Team Analysis


INVESTMENT INCENTIVES IN TURKEY

1. General Incentive System

2. Incentives for Large Scale

Investments

3. Regional Incentive System

4. Incentives for Strategic Investments


NEW INCENTIVE SYSTEM

1. General Incentives 2. Regional Incentives

3. Incentives for large-scale Investments

4. Incentives for Strategic Investments

VAT Exemption Custom Duty Exemption

VAT Exemption Custom Duty Exemption Tax Deduction Employer’s share for

insurance premium payment

Land provision



Land provision Interest Support (except 1st

and 2nd regions)



Land provision Interest Support VAT Refund

In the 6th Region; income withholding tax and employee’s share for insurance premium payment


Regional Incentive Map


SPECIFIC PRIORITY INVESTMENTS

Specific Priority Investments to be supported by measures of Region V regardless of the region of the Investment:

Mining investments

Railroad and maritime transportation investments

Test facilities, wind tunnel and similar investments made for

automotive, space or defense industries

Tourism investments in Cultural and Preservation and Development

Regions determined by the Council of Ministers Decree

Primary, Middle and High School investments by private sector

Specific pharmaceutical and defense industry investments with

minimum investment amount of 20 million TL

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LARGE-SCALE INVESTMENT INCENTIVE SCHEMEInvestment Sectors Amount of minimum

fixed investment (million TL)

Production of Refined Petroleum Products 1000Production of Chemical Products 200Ports and Port Services 200 Automotive OEM Investments 200 Automotive Supply Industry Investments 50 Railway and Tram Locomotives and/or Railway and Tram Cars 50Transit Pipeline Transportation Services 50Electronics 50 Medical, High Precision and Optical Equipment 50Pharmaceuticals 50 Aircraft and Space Vehicles and/or Ports 50Machinery (including electrical machinery and equipment) 50Mining investment (including metal production) 50


STRATEGIC INVESTMENT INCENTIVE SCHEME

Investments meeting the criteria below are supported within the framework of

the Strategic Investment Incentive Scheme:

Having an import of at least 50 million USD for goods to be produced in the last one year period.

Realizing the production of intermediate and final goods with high import dependence of which more than 50 % are supplied by import,

Having a minimum investment amount of 50 million TL ,

Creating minimum 40 % added value,

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APPLICATION OF THE STRATEGIC INVESTMENT

Incentives (‘000 TL) Investment Amount: 50 Million TL Employment: 100 People

Investment Amount: 500 Milyon TL Employment: 1000 People

VAT Exemption 1.140 11.400

Custom Duty Exemption 700 7.000

VAT Refund - 11.460

Tax Deduction 25.000 250.000

Employer’s Share for Social Security Premium

1.445 14.448

Interest Support 2.500 25.000

Land Allocation 2.500 25.000

Total State Support 33.285 344.308

Support Density (%) 67 69

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For Questions and Inquiries•Dr. Serdar Altay [email protected]•Mehmet Tangut [email protected]

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republic of turkey prime ministry investment support and promotion agency of turkey ( ispat )

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