THE REPUBLIC OF TURKEY PRIME MINISTRY Investment Support and - - PowerPoint PPT Presentation

THE REPUBLIC OF TURKEY PRIME MINISTRY Investment Support and Promotion Agency of Turkey (ISPAT)

The Investment Climate and the Mining Sector in Turkey

• M. İlker Aycı, President of ISPAT

March 4, 2013 PDAC, Canada

ANKARA ISTANBUL

The Republic of Turkey Prime Ministry Investment Support and Promotion Agency

• Attached to the Prime Ministry and
• Reports directly to the Prime Minister
• 2 offices (Ankara – Istanbul)
• Established in 2007
• Private sector approach
• Multi-lingual, professional and

dedicated project directors, International representatives network worldwide

• Guidance on: Laws, Regulations, Site

Selection, Sectoral Reports, Local Market Players, Potential Partners

• Confidential, Free of Charge

2

The International Network

ISPAT

3

Dynamic, Stable & Attractive Economy

Strong Domestic Market

International Hub to Access Multiple Markets Investment Friendly Business Environment

Why invest in Turkey?

4

Source: IMF World Economic Outlook, April 2012;

5,2 4,8 4,7 4,6 4,5 3,9 3,8 3,7 3,6 3,5 3,4 2,3 1,5

1 2 3 4 5 6

Average Annual Real GDP Growth (%) 2002-2011

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774 514 448 408 279 248 239 215 190 165 140 96 54

100 200 300 400 500 600 700 800

2011 GDP (Current Prices, $Billion)

Booming economy reaching $774 billion in 2011 up from $230 billion in 2002 Why invest in Turkey?

Source: IMF World Economic Outlook, April 2012

Fastest growing economy in Europe

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9,2 7,5 6,3 6,2 5,5 4,3 4,2 3,9 2,7 1,3 0,4 8,5 2,7 3,6 6,5 4,0 4,3 3,3 4,4 1,7 1,7 1,7 1 2 3 4 5 6 7 8 9 10 Turkey Brazil Korea Indones ia Mexico Russia Slovakia Poland Czech Rep. Hungary Bulgaria 2010 2011 Annual Real GDP Growth (%)

Why invest in Turkey?

Source: OECD Economic Outlook No.91, June 2012

5,2 4,8 3,6 3,6 3,5 3,4 3,3 3,3 2,9 2,8 2,8 2,8 2,7 2,6 2,6 2,5 2,5 2,4 2,3 2,3 2,2 2,2 2,1 2,1 2,1 2,0 1,9 1,9 1,8 1,8 1,7 1,7 1,6 1,4 1,2 0,0 1,0 2,0 3,0 4,0 5,0 6,0 Turkey Chile Australia Norway Mexico Korea Slovak Rep. Estonia Iceland Luxembourg Poland Israel US Ireland Sweden Czech Rep. Austria OECD Spain New Zealand Hungary Canada Finland Switzerland Denmark Netherlands UK Italy Belgium France Greece Slovenia Germany Portugal Japan

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Average Annual Real GDP Growth (%) Forecast in the OECD Countries 2012-2017

Turkey will be the fastest growing economy among the OECD countries in the near future Why invest in Turkey?

4h

Strong Domestic Market and an International Hub Why invest in Turkey?

National Treatment = Guarantee

• f Transfers

Access to Real Estate International Arbitration Employment of Expatriates Freedom to Invest Protection Against Expropriation The New Commercial Code Corporate Income Tax

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Investment Friendly Business Environment with Structural Reforms Why invest in Turkey?

Global Competitiveness Index

Year Number of Countries Turkey’s Rank Turkey’s Rank (Percentile) 2004 104 66 63,5 2005 117 66 56,4 2006 125 59 47,2 2007 131 54 41,2 2008 134 63 47,0 2009 133 61 45,9 2010 139 61 43,9 2011 142 59 41,5 2012 144 43 29,8

Source: WEF

Structural Reforms: Yielding Results & Increasing Competitiveness Why invest in Turkey?

Turkish Mining Industry

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SOURCE: General Directorate of Mineral Research and Exploration

Boron Salts Marble Na-Feldspar Bentonite Pumice Perlite Diatomite Barite Chromium Silver Gold Phosphate Copper 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%

Turkey is one of the richest countries in the world in terms

• f minerals.

It possesses the largest reserves of several minerals.

Mining reserves in Turkey (as a percentage of world reserves)

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SOURCE: Ministry of Energy, USGS

Turkish Mining Industry

Turkey’s share of world production

Turkish Mining Industry

Foreign trade of major commodities (2011)

Turkey is strong in exports of

▪

Gold jewelry

▪

Natural stones and cement

Major trade imbalances in

▪

Coal

▪

Copper

▪

Aluminum

PPI is a composite index that measures the effects of government policies on the investment attractiveness.

SOURCE: Fraser Institute

Turkish Mining Industry

Policy potential index for mining (score out of 100 in 2012)

Turkey is an investment friendly destination for mining companies

10 20 30 40 50 60 70 Canada Australia Turkey Brazil South Africa Russia Kazakhtan India Zimbabwe

70 65 50 38 35 28 23 21 13

▪

Low sea freight rates in Turkey supported due to availability of excess container capacity on the Turkey – China route

▪

Overall processing cost increase in SA driven by power tariffs

2010 cost comparison USD per metric tonne (real 2011) 2020 cost comparison USD per metric tonne (real 2011) 59 64 25 47 31 21 Mining costs Processing costs Royalties Inland transport Sea freight Other 158 4 34 3 194 6 55 2

* Underground mines with ~1 million metric tonne

75 70 36 52 34 18 Mining costs Processing costs Royalties Inland transport Sea freight Other 172 5 41 4 241 10 66 2

Turkish Mining Industry

Comparison of Turkish and South African CIF China cost base for comparable mines*

SOURCE: Nithia Capital Resources

2004 2005 2006 2007 2008 2009 2010 2011 2012 138 188 236 318 409 478 537 627 687 Source: Ministry of Economy

Turkey wants to see more companies investing in exploration, exploitation, and refining facilities Turkish Mining Industry

Number of Companies with Foreign Capital in Mining

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

 VAT Exemption  Custom Duty Exemption  Tax Deduction  Employer’s share for insurance premium payment  Land provision  Interest Support (except 1st and 2nd regions)

 VAT Exemption  Custom Duty Exemption  Tax Deduction  Employer’s share for insurance premium payment  Land provision  Interest Support  VAT Refund In the 6th Region: income withholding tax and employee’s share for insurance premium payment

The New Incentive Scheme

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• V.A.T. Exemption (for the imported and

domestically provided Machinery and Equipment)

• Customs Duty Exemption (for the imported

Machinery and Equipment)

• Reduced Corporate Income Tax (C.I.T. between

%2 - %10)

• Social Security Premium Support (Both Employer’s

and Employee’s Share, for 2 – 12 years)

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• Land Allocation
• Interest Support
• Income Tax Withholding Allowance
• VAT Refund for Construction Expenses
• Rates of instruments determined in a

descending rate in 6 regions scaled from the most developed to the least developed regions

The New Incentive Scheme

“Specific Priority Investments” Incentives for Mining Investments in the mining sector can enjoy special privileges, and will be supported by the more attractive instruments of Region V regardless of their location. Strategic Incentives Mining investments can also benefit from stronger supports than other incentives under the “Strategic Incentives” scheme, regardless of the region, provided that they meet the below criteria:

• to be made for the production of intermediate and finished

goods with high import dependency and of these goods more than 50% are supplied by imports

• to have a minimum investment amount of TRY 50 million
• to create a minimum added-value of 40%
• to possess an import value of at least USD 50 million during the

past one year, for goods to be produced 19

The New Incentive Scheme

ON

THANK YOU FOR YOUR ATTENTION

www.invest.gov.tr info@invest.gov.tr