Turkey: "Hidden" Risks In Mining Projects In Turkey

Last Updated: 21 December 2016
Article by Alper Utaş

Soil of Turkey includes a lot of variety in mines and minerals. There is an extensive mining capacity and mining possibilities encompass various regions. However, a risky business in its very nature, investment and procedures to start mining operations and the rules to follow during mining operations may get complicated and require professional legal, financial and technical aid and follow-up. The complications may somewhat get augmented due to the general mining practices which may not always be "compliance-friendly" and the time taken by the administrative bureaucracy for transactions related to the mining.

The primary mining-specific legislation and regulations in Turkey generally consist of (i) Mining Law (Law No. 3213, published in the Official Gazette dated June 15, 1985 and numbered 18785) ("Mining Law"), (ii) Implementation Regulation on Mining Activities (published in the Official Gazette dated November 6, 2010 and numbered 27751) ("Mining Regulation"), (iii) Permit Regulation on Mining Activities (published in the Official Gazette dated June 21, 2015 and numbered 25852) ("Permit Regulation"), (iv) Work Health and Safety Regulation in Mining Workplaces (published in the Official Gazette dated September 19, 2013 and numbered 28770) ("WHS Regulation") and (v) Regulation on Mining Wastes (published in the Official Gazette dated July 15, 2015 and numbered 29417 – to enter into force on July 15, 2017) ("Waste Regulation"). Regulatory authority overseeing implementation of the Mining Law, Mining Regulation and Permit Regulation is the General Directorate of Mining Works ("GDMW"), an institution functioning under Turkish Ministry of Energy and Natural Resources. There are naturally various other laws and regulations (related to obligations, environment, labor, land use, workplace permits, etc.) which would apply in each mining project/operations or which may apply depending on the specifics of the mining project/operations.

In this article, we will attempt to elaborate a few issues which frequently constitute "hidden" risks in mining projects in Turkey. The reason we call them "hidden" is because these risks tend to be (mainly unintentionally) be neglected or forgotten about by those involved in mining activities and operations; however, they still continue to pose serious legal risks.

Production Status

Production status and levels are important elements which are frequently not paid enough attention to in Turkish mining practice. However, keeping the mines operative in terms of production and correct and due submission of annual notifications form key issues in keeping the mining licenses away from a number of risks.

Article 24 of the Mining Law and Article 37 of the Mining Regulation sets forth margins and penalties. The license owners who produce less than 10% production of the production level declared in the mining project are to be fined TRY 50,000. The licenses with a production output amounting to less than 10% of the production level declared in the mining project in any three years within a five years period are subject to cancellation.

Although certain mine owners may tend to declare production to avoid penalties even if there is no production in the minefield, such act would also be subject to TRY 50,000 administrative monetary fine as per Article 10 of the Mining Law. Pursuant to the same article, repetitive violations may result in doubling fines and eventual license cancellation after three repetitions in three years.

Explosives

Use of explosives in mining activities is subject to various legal and regulatory necessities. As per Article 118 of the By-Law on Production, Import, Transportation, Preservation, Storage, Sale, Use, Disposal and Inspection Principles and Procedures of Explosives, Hunting Equipment and Similar Goods Excluded from Monopoly (published in the Official Gazette dated September 29, 1987 and numbered 19859) ("By-Law on Explosives"), use of explosives is subject to an administrative permit to be obtained from the provincial security/police offices. Validity of such permit requires existence of a compulsory liability insurance policy for hazardous materials, which is intended to provide coverage for compensation of third party losses due to activities engaged with the explosives. The insurance policy shall be kept valid for the whole permit period for the permit to keep its validity. Additionally, the persons using the explosives shall duly have a blaster certification.

Storage and transportation of such explosives are also subject to certain rules. In obtainment of a permit for explosives, lease agreement or storage depot permit (in case explosives are statutorily necessitated to be held in depots, an issue which is to be determined in accordance with the type of explosives) for the relevant storage area is required. As per Article 53 of the By-Law on Explosives, transportation of the explosives also requires a permit from local security/police offices.

Use of explosives also has environmental regulatory necessities. Pursuant to the Regulation on Environmental Permits and Licenses (published in the Official Gazette dated September 10, 2014 and numbered 29115), minefields whereby explosives are used (as explicitly listed under Annex-2 of the regulation) are subject to an environmental permits.

These numerous permits related to explosives may frequently get neglected in practice. However, due to the liabilities which may potentially arise therefrom (including individual criminal responsibility and substantial administrative monetary fines), due care shall be shown in compliance.  

Land Use

Due to the nature of mining, land use matters are critical. The type of the land used in mining activities matters. Due to GDMW's requirements in granting of a mining permit, most of the miners are aware that lease agreements are necessitated for private properties or forest permits are required for forest areas in conduct of mining activities. However, what they or GDMW may fail to check is the status of the actual property used and legal/regulatory necessities that may arise from such status.

As per Article 13 of the Law on Soil Protection and Land Use (Law No. 5403, published in the Official Gazette dated July 19, 2005 and numbered 25880) ("Soil Protection Law"), a permit from the relevant Directorate of Food, Agriculture and Husbandry would be required if the leased private property to be used for mining purposes is an agricultural area. Characteristics of the relevant agricultural area are important in determination of the permit roadmap. Definite, aqueous or planted agricultural lands and lands used for production of specific agricultural products cannot be used unless there is a ministry decision to that effect. Other agricultural areas (e.g. standard croplands) would require an allocation from the relevant Directorate of Food, Agriculture and Husbandry.

Accordingly, it would be strongly suggested for a letter to be obtained from the relevant Directorate of Food, Agriculture and Husbandry in respect to the agricultural status of the lands to be used for mining purposes. Pursuant to Article 21 of the Soil Protection Law, substantial administrative monetary fines, compensation requirements and suspension of works are set forth for unlawful use of agricultural lands.

Registration of Work Machines

Pursuant to Article 29 of the Road Traffic Regulation (published in the Official Gazette dated July 18, 1997 and numbered 23053 (first bis)) and Principles on Registration of Work Machines (Turkish Union of Chambers and Commodity Exchanges board decision dated October 17, 2008 and numbered 113), work machines shall be registered in the chambers of industry and commerce. It is a frequently observed case in Turkey that these machines are not registered. Official transfer of these work machines would not be possible if they are not duly registered.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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