Mines, as a form of natural resource, belong to the Turkish state and are not subject to private ownership, regardless of their geological location (in land, or in, on or under the continental shelf or under water, including under rivers, lakes, inland seas and coastal waters). The Mining Law categorizes mines into five groups based on their chemical, physical and mineralogical specifications and area of use. These categories are as follows:
- Group I: construction minerals such as sands, gravels and clays;
- Group II: decorative stones such as marbles and granites;
- Group III: salts and gases other than natural gas;
- Group IV: industrial raw materials, energy raw materials and metallic materials including gold and silver; and
- Group V: precious and semi-precious minerals such as diamonds.
Turkish individuals or companies incorporated in Turkey may engage in mining activities so long as they obtain the necessary mining licenses and permits from the General Directorate of Mining and Petroleum Affairs. There is no foreign ownership restriction for such foreign companies. The articles of association of the license/permit applicant company must meet certain conditions set forth under the licensing regime. Applicants for mining licenses and permits must prove technical and financial capability to operate in the mining sector. Should the Directorate deem that capability criteria have not satisfactorily been met, applicants are granted three months from receipt of the Directorate’s notification to fulfil those conditions.
The Mining Law provides an extensive permitting regime, which divides the development of a mine into three unique stages: (i) exploration, (ii) operation, and (iii) production.
The exploration stage permit covers preliminary assessment of the mineral reserves underground. At the end of this stage, the license holder must either convert the exploration permit into an operation license or leave the field.
The operation stage is where the permit holder undertakes, on a field with proven reserves, all preparatory work to commence ore production. During the operation stage, other necessary governmental authorizations and permits required for mining activities must be obtained. These authorizations usually include an “Environmental Impact Assessment Affirmative Decision” from the Ministry of Environment and/or a forestry permit from the Ministry of Forestry. In order to obtain an operation license, the applicant’s financial capability must be proven to be at least 20 percent of the total investment amount specified in the project.
The production stage may start only after the mine is technically ready for the operations. Technical readiness is evaluated by the General Directorate of Mining and Petroleum Affairs and, if the evaluation is affirmative, the mine is certified by issuance of an operation permit.
Licenses and/or permits are transferrable to third parties who also meet the relevant eligibility criteria. In addition, the secondary legislation requires the Ministry of Energy’s approval to share transfers exceeding 10 percent of a license holder. Transfers of mining rights must be registered at the General Directorate of Mining Affairs.
The Mining Law also allows license holders to enter into mine lease agreements, known as “royalty agreements”, that are subject to Ministry of Energy approval. Under a royalty agreement, the operation license holder retains the license but transfers the right to operate the mine to a third party contractor for a specific period in consideration of a certain agreed upon compensation. Royalty agreements for coal mines are not allowed unless the license holder is a public institution or its affiliate.
Failure to comply with the requirements of the Mining Law may result in administrative fines. Depending on the compliance issue, other fines may be calculated proportional to: (i) the amount of license fee or other related amounts (e.g. letter of guarantee), (ii) the state’s share on the ore extracted or (iii) the amount of revenue generated as a result of the failure. In case of non-compliance with Turkish environmental laws and regulations, mining activities may be suspended and relevant facilities may be closed.
According to the Ministry of Energy’s announcements, Turkey’s annual mining export goal for the year 2023 is US$10bn. In 2021, Turkey exported approximately US$5.9bn of mining products.