REPUBLIC OF TURKEY PRIME MINISTRY Investment Support and Promotion Agency of Turkey (ISPAT) Turkish Mining Industry

AGENDA The Agency Overview of Turkish Mining Industry Deep Dive on Priority Minerals of Turkish Mining Industry New Incentive Regime How did we prioritize these minerals ı goster

Investment Support and Promotion Agency of Turkey (ISPAT)

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

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

Turkish Mining Industry Turkey’s Potential is: 2.5% of the World Reserves of Industrial Raw Materials 0.6% of the World Reserves of Metallic Minerals Number of Companies with Foreign Capital in Mining SOURCE: USGS, MTA

Turkish Mining Industry 2010, U.S. $ billions + Turkey strong in exports of Gold jewelry Natural stones and cement Major trade imbalances in Coal Copper Aluminum SOURCE: UN Comtrade; EtiBor; McKinsey&Company +Includes all products in the value chain in addition to ores and concentrates *Raw Materials ,Ores and Concentrates

Turkish Mining Industry Current Global Market Size (U.S $Billion) Global Crisis SOURCE: McKinsey&Company, State Planning Organization

Gold Overview 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. Gold production in Turkey gained momentum following the legislation change facilitating exportation of unrefined gold. 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 SOURCE: MTA, Istanbul Gold Exchange, McKinsey&Company

Gold Turkish Gold Reserves Anatolia Minerals Koza Gold mine Eldorado Gold Potential gold-silver reserves Turkish Gold Reserves Turkey has 700 Tons of proven reserves concentrated in Aegean and Black Sea regions Reserve Name Reserves 2010 Tons Production 2010 Tons Company Possible Production Sites SOURCE: MTA, Istanbul Gold Exchange, McKinsey&Company

Copper Turkish Copper Reserves Copper Imports Operable Mines Operational 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. Copper Imports 2010,thousand metric tons +5% Primary Production Given small refining capacity most of the copper sold as concentrate. Refined copper importun içinde neler var? 5 Concentrate production Exported as concentrate Refined in domestic facilities Secondary production from scrap Refined Copper import Total domestic refined Copper consumption SOURCE: MTA,McKinsey&Company

Aluminum Turkish Bauxite Reserves In midstream Turkey has a big gap driven primarily by automotive and construction industries. Net Trade 2010, U.S. $ Billion Mid-stream production by Aluminum source 2010, thousand metric tons Semi production 63 Bauxite mining + alumina refining Aluminium smelting 0.025 1.0 1.0 Upstream Midstream Downstream Secondary (scrap to aluminum players) Primary (Seydişehir) Net imports SOURCE: MTA,McKinsey&Company

Chromium Chromium Production Turkish Chromium Reserves Chromium Export Turkey has %6 of world production. Worlds 3rd chromite exporter with %12.8. Chromium Production Chromium Export Thousand tons U.S. $ Million +1148% 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

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

LARGE-SCALE INVESTMENT INCENTIVE SCHEME Investment Sectors Amount of minimum fixed investment (million TL) Production of Refined Petroleum Products 1000 Production of Chemical Products 200 Ports and Port Services Automotive OEM Investments Automotive Supply Industry Investments 50 Railway and Tram Locomotives and/or Railway and Tram Cars Transit Pipeline Transportation Services Electronics Medical, High Precision and Optical Equipment Pharmaceuticals Aircraft and Space Vehicles and/or Ports Machinery (including electrical machinery and equipment) Mining investment (including metal production)

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,

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 Land Allocation Total State Support 33.285 344.308 Support Density (%) 67 69

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THANK YOU FOR YOUR ATTENTION For Questions and Inquiries Dr. Serdar Altay saltay@invest.gov.tr Mehmet Tangut mtangut@invest.gov.tr