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Investment in Mining & Beneficiation in Turkey – A National Imperative

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This September, the third edition of the “Mining Turkey” magazine was published. It is the only mining magazine in Turkey that is published in English language. The magazine describes its aim to reach foreigner executives and engineers primarily who lives in Turkey and foreigner companies that are interested in Turkish mining industry. Besides introducing major mining companies in Turkey, the magazine also gives place to articles describing the current status of Turkey and the mining industry in here for those who want to invest in Turkey. Especially the article by the academics Mustafa Kahraman and Sean Dessureault from The Arizona University are worth reading since it explains the profile of Turkey in detail under the “Economic and Currency”, “Political Stability and Political Risk”, “Social Issues”, “Permitting”, “Tax Liability” and many other headings. We’d like to share this article with you:

INVESTMENT IN MINING BENEFICATION IN TURKEY – A NATIONAL IMPERATIVE

WELCOME TO THE CENTER OF THE WORLD

When arriving in Turkey one should feel welcome to the centre of the world, because geographically – It literally is! Clear evidence is everywhere depicting the more than 10,000 yrs of civilisations making it geo culturally the centre. Of course in recent times it has also become clear that its where East meets West and has become geopolitically potentially the most important centre. And lastly with its top 3 fastest growing economy geo-economically – all must not only watch but be invested this space or get left behind.

ECONOMIC GROWTH VS. BALANCE OF PAYMENTS (BOP)?

Of course with the very strongly expanding economy come some serious supporting requirements such as an unrestricted supply of energy and metals and minerals. And now as a result of a historic lack of focus on these elements of support for the economy, Turkey is and will remain for sometime in the grip of a serious negative balance of payments. Energy related natural resources and Metals imports in particular being the major contributors in this regard. By way of an example the tables and graph below show the conservative estimated impact on the BoP by 2023 of imports of two main industrial commodities Copper & Zinc and the collective impact of 5 major imports for industrial use.

ECONOMIC GROWTH VS BALANCE OF PAYMENTS?

But this is Turkey! Its fundamental geological prospectivity and proliferation of infrastructure (Copper, Zinc, Lead, Iron Ore, Chrome, etc), industrial mineral and precious metal commodities, when mated with its highly educated, strong work ethic population, it is only a matter of time and ironing out of bureaucracy in industry related government departments, with some business culture factor modifications and this will be turned around significantly The mining potential in Turkey and its ability to generate future self sufficiency is illustrated in the table below.

AN ECONOMIC ACHILLES HEEL? – MINING

But is Mining an economic Achilles heel? Mining historically has shown a clear lack of focus on sustainability with a ‘Find it, Dig it, Sell it’ basic approach borne out of the trading culture embedded in the populations gene pool. And with first, a fundamental lack of understanding of the Mining Value Chain and second, a historic lack of focus on professionalism in mining companies established and lack of adherences to any acceptable standards in terms of

• Policies & procedures, Safety

• Management & Reporting with Regulation and Inspection While any beneficiation being seen as necessary evil with export of un-beneficiated materials prevalent across the sector in search of short term profit.

SO WHAT ARE THE MISSING LINKS?

There are a number of clear missing links or elements currently available for investors in the sector as follows;

• Easily accessible, publicly available, clear information on potential projects by commodity;

• Data and/or information which is compliant with recognizable mining and mineral project definitions, standards and codes;

• On all prospective or mineable geographical areas and properties across all regions of Turkey;

• Ranked and prioritized with stated available local provincial and state incentives for investment;

• Availability of proximal skills, infrastructure & services;

• Pre-prepared developmental road map to facilitate immediate economic impact,

The missing links or elements currently unavailable as mentioned in detail above are the cause of a significantly measureable slow pace of investment growth and more importantly project execution at feasibility, construction and production stages in the required commodities to deal with the BoP issue fast enough to stop the economy running out of steam and the country running out of funds to support further growth. So what should the government be doing to rectify this when the incentives alone are just not enough to accelerate real development to sustainable economically contributing production? It should have a clear economic focus on the independent contracted professional delivery of the following;

THE ECONOMIC FOCUS

• Creation of an attractive “Credible & executable” visible Mining & Beneficiation investment plan;

• With focus on investment support of broader & deeper exploration using all available technologies for resource ID & classification;

• With focus on mining value chain positioning for investment definition and development selection with investment support for all beneficiation in particular; and

• With focus on closure of the entire value chain, Exploration, Mining, Beneficiation, Smelting & Refining, for optimal resource utilization within the economy.

MINING BUSINESS IMPERATIVES

The clear imperatives within the generated plan for immediate execution thereafter must;

• Ensure exploration programmes meet internationally accepted norms & standards;

• Ensure Mineral Resources and/or Reserves are defined to verifiable and auditable limits within accepted codes for reporting on Mineral Resources, e.g.: NI43-101 or JORC;

• Undertake Valuation of all Mineral Resources and/or Reserves defined for exploitation according to accepted and recognised codes, e.g.: VALMIN or SAMVAL in order to attract positive investment for project development

PROJECT COMMUNICATION PLAN

And the plan must ofcourse have a clearly specified objective to;

• Develop a Communication plan for the project to be seen in a positive way, aligned with “Equator Principles” (“EQP”) for the attraction of mining/ beneficiation investment in Turkey;

• To eradicate the negative perception created by environmentalists and other activists against mining & mineral exploitation; and

• Through engagement with communities proximal to likely mining/ beneficiation development sites for participation and broader social development for all stakeholders.

REGIONAL INCENTIVES

Another clear objective will be to properly contextualize the regional incentives offered by the Turkish Government to give focus to;

• High Value, easily accessed, focus under-developed areas like Region V Eastern Anatolia and Region VI SE Turkey;

• Create opportunity to continue grow at an accelerated rate into a major investment hub for Mining/Beneficiation in Eastern Europe/Asia minor with massive spin offs in Financial, Industrial consumable, Industrial equipment, Technology and Human Resource development; and

• Enable realization of many extensional benefits in terms of economies of scale and economic support of citizens in all sectors of the economy both local and regional. The main key deliverables will be as follows for such a plan.

PROJECT KEY DELIVERABLES

1. Compliance, Governance, Transparency and Sustainability reporting are key in the establishment of Credibility – “Essentially Investor Relationship Management”

2. Creating a reputation of delivery through delivering on the full value of the projects by completing the Value Chain – “Essentially Reputation Management”

3. Selection of the investments and local investment partners – “Essentially Sustainable Development Management”

4. Project Economic Delivery (management of expectation) – “Essentially Prioritization for Realistic Deliverables”

CONCLUSION

Well after all of the above it should be a no-brainer to execute this plan, shouldn’t it!? Unfortunately this plan has existed, architected by myself originally in 2005 for the incumbent Minister at the time Dr. Hilmi Guler. To his considerable credit Dr. Guler tried to get things started before he was replaced by the current incumbent. Since then bureaucratic blockage by parties claiming ownership, looking to steal the idea for credit award have served to sterilize the systems ability to deliver. No government or bureaucracy can deliver this or any plan for immediate impact without independent qualified outside contracted consultants to drive and deliver the required results. I continually live in hope that someone somewhere is listening because we/Turkey/our country needs this now!

You can read the whole magazine (the third issue) here in this address:

http://www.madencilik-turkiye.com/engdergi/sayi3/MiningTurkey_sayi3.pdf
www.miningturkeymag.com

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