Borates key to new Turkish energy strategy, says minstry

By Myles McCormick
Published: Wednesday, 24 February 2016

Minerals highlighted in new roadmap as government aims to cut resource dependency.

News12 

Turkey wants to reduce its resource dependency and produce more energy internally (source:  Felix Gonzalez, via Flickr).

Borates are to be one of the focuses of a new energy policy under review by the Turkish Parliamentary Planning and Budgetary Commission, which is considering a submission from the Ministry of Energy and Natural Resources to update the country’s energy sector roadmap, local news service, Daily Sabah, reported at the beginning of February.

The plan calls for investment of $110bn in the Turkish natural resources industry, mainly from the private sector, over the next 10 years, with boron as one of the priorities. Boron is to be a "major target" for R&D activity as the country shifts to add value domestically, exporting borate products rather than concentrated boron, the paper said.

The list of products to be manufactured includes boron oxide, agricultural boron, zinc chlorate and anhydrous borax.

Turkey holds almost 73% of the world’s total boron reserves, at 955.3m tonnes B2O3. Turkish state-owned Eti Maden IGM is the world’s largest producer of borates, producing boron salts at four sites, Kirka, Emet, Bigadic and Bandirma. In 2014, the company produced 47% of the world’s 4.3m tonne boron output.

Eti functions as a global group with European, US, Russian, Chinese and Scandinavian operations via its affiliates and subsidiaries: Etimine SA, Etimine USA Inc., Etiproducts Russia, Etimine (China) Co. and AB Etiproducts OY, respectively.

Beyond borates, the thrust of the Turkish Energy and Natural Resources Ministry’s new roadmap will be to reduce Turkey’s resource dependency.

The country will aim to increase the proportion of its GDP contributed by the mining sector over the coming years, with an emphasis on ensuring activities are carried out in an environmentally-friendly manner and on health and safety rules and regulations.

There will also be a concentration on the nuclear sector, with Turkish energy demand expected to double over the coming decade. The country expects energy reliance on Russia to drop by 50% by 2019, while its use of natural gas in electricity will be reduced to below 38% within the same timeframe.

Is government policy holding back Turkey’s mining industry?

By Dilara Kenber

The Turkish economy over the last ten years has emerged as one of the world’s fastest growing markets, boasting a GDP that has more than tripled since 2003.

A stronger economic base has enabled Turkey to start investing more in its mining sector, which contributes around 4% of its national income. But, despite having extensive geological wealth – 70 of the 90 main minerals traded worldwide can be found in Turkey – the country is relatively new and undeveloped as a mining centre.

Efforts to shift Turkey’s mineral wealth out of government ownership and into private hands have already yielded progress.

"Today just 10-15% of Turkey’s mining operations belong to public bodies, such as Turkish Coal Enterprises (TKI), Turkish Hard Coal Enterprises (TTK) and Eti Maden," Nevzat Kavaklı, Deputy Undersecretary of the Minister of Energy and Natural resources, said recently. "We are ready to increase foreign mining companies’ share in our country. To encourage these foreign companies, the Ministry of Economy has established new incentive schemes for strategic investments," he added.

Although investors have broadly welcomed the amendments to date, further government reform is needed to keep growth at a consistent level. Among the changes that still need to be implemented are a process to streamline applications for mining licences. Under the current system, bureaucratic bottlenecks mean that some companies can wait years to receive permits to conduct exploration and construct mines and plants.

Notwithstanding the weakness in global financial markets, the Turkish government has set ambitious targets for its economy, including a goal of reaching $500bn in export revenue, $15bn of which is slated to come from the mineral sector, by 2020. 

These targets rely heavily on the consistent development of both the Turkish economy and foreign investment. "The Turkish Republic is in need of financial direct investment, because of the large deficit in the national budget," said Zeynep Dereli, managing director of APCO Worldwide Turkey, a global strategic communications and advisory firm. "The financing of this deficit, given the volatility with the Turkish lira, and lower GDP growth, will have an effect on the country," he added.

Turkey is also facing wider challenges. Its longstanding trading relationship with Iran has allowed it to benefit as a vehicle for investing in the formerly isolated Middle Eastern state. The lifting of international sanctions against Iran this year, following the implementation of the July 2015 joint comprehensive plan of action (JPCOA), is likely to increase the flow of trade between the two countries, but also means that Turkey will now have to compete with its neighbour for foreign investment.

Heightened political tensions with Russia over the shooting down of a Russian fighter jet in Turkish airspace in November last year are likewise a concern, as is personal security in the country, which has come under scrutiny following recent terror attacks in Istanbul and Ankara. The Syrian crisis spilling over Turkey’s southern border has also contributed to recommendations against travel to the country.

The two general elections held in Turkey in 2015 illustrated deep divisions within the country and have raised questions over its political stability, with negative economic consequences. Turkish inflation is forecast to rise by 7% this year, unnerving investors and echoing the high rates of the past.