REPUBLIC OF TURKEY PRIME MINISTRY Investment Support and

REPUBLIC OF TURKEY PRIME MINISTRY Investment Support and Promotion Agency of Turkey (ISPAT) Turkish Mining Industry 0

AGENDA The Agency Overview of Turkish Mining Industry Deep Dive on Priority Minerals of Turkish Mining Industry New Incentive Regime Investment Support and Promotion Agency of Turkey

Investment Support and Promotion Agency of Turkey (ISPAT) Investment Support and Promotion Agency of Turkey

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 Investment Support and Promotion Agency of Turkey

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

Turkish Mining Industry Iron 0. 03% Copper 0. 29% Phosphate Gold 0. 57% Silver 1. 06% Turkey’s Potential is: Chromium Barite 1. 44% 2. 5% of the World Reserves of Industrial Raw Materials Diatomite 0. 6% of the World Reserves of Metallic Minerals 0. 67% 4. 73% 4. 81% Perlite Pumice 8. 70% 9. 74% Bentonite 13. 40% Na-Feldspar Marble 19. 14% 40. 00% Boron Salts 72. 00% Number of Companies with Foreign Capital in Mining 236 318 409 478 188 138 2004 2005 2006 2007 2008 2009 SOURCE: USGS, MTA Investment Support and Promotion Agency of Turkey 5

Turkish Mining Industry Mining Sector Exports* Mining Sector Imports* U. S $ Million 4. 541 4. 493 4. 247 U. S $ Million 2. 612 3. 528 1. 468 2. 181 2005 2006 2007 2. 327 2. 004 2. 732 3. 468 3. 119 2008 2009 2010 2005 2006 2007 2008 2009 2010, U. S. $ billions + Turkey strong in exports of ▪ ▪ Gold jewelry Natural stones and cement Major trade imbalances in ▪ ▪ ▪ SOURCE: UN Comtrade; Eti. Bor; Mc. Kinsey&Company Investment Support and Promotion Agency of Turkey +Includes all products in the value chain in addition to ores and concentrates Coal Copper Aluminum *Raw Materials , Ores and Concentrates 6

Turkish Mining Industry Current Global Market Size (U. S $Billion) Growth of Output in Mining Sector % 9. 0 8. 1 5. 2 5. 4 4. 7 Global Crisis -6. 9 2005 2006 U. S $ Million 2007 2008 2009 10. 172 8. 105 5. 166 2005 2010 Mining Sector Income 9. 210 10. 250 6. 214 2006 2007 2008 2009 2010 SOURCE: Mc. Kinsey&Company, State Planning Organization Investment Support and Promotion Agency of Turkey 7

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 tons 1 making up for as high as 1/8 th of globally proven reserves. Gold Production of Turkey Tons Import Export Turkey Gold Trade Tons 24 +30% 15 5 8 10 275 17 242 203 11 38 10 2005 2006 2007 2008 2009 2010 2011 2005 180 2006 2007 165 142 64 56 53 49 2008 2009 2010 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, Mc. Kinsey&Company Investment Support and Promotion Agency of Turkey 8

Gold reserves Gold Potential gold-silver reserves Koza Gold mine Turkish Gold Reserves Eldorado Gold Anatolia Minerals Turkey has 700 Tons of proven reserves concentrated in Aegean and Black Sea regions Production 2010 Tons 10 24 ep Ö ltı nt Ta 11 e ks üt O th er 27 18 ç 34 A ak or rt a ı zl şo ı ağ r 31 15 Şi 3 ira 5 K Ovacık 4 D 0 za 47 28 89 gi Çukuralan and Kaymaz Masra 332 pa 0 A 53 To Efemçukuru Ç 415 12 Possible Production Sites ta l Kışladağ Company ni Reserves 2010 Tons Ye Reserve Name SOURCE: MTA, Istanbul Gold Exchange, Mc. Kinsey&Company Investment Support and Promotion Agency of Turkey 9

Copper Operable Mines Turkish Copper Reserves 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 272 2008 +5% 289 2009 379 2010, thousand metric tons Thousand Tons 386 +5% 332 2010 Primary Production 312 2011 2015 Given small refining capacity most of the copper sold as concentrate. 332 168 126 42 Concentrate production Exported as Refined in concentrate domestic facilities 5 Secondary production from scrap Refined Total domestic Copper refined Copper import consumption SOURCE: MTA, Mc. Kinsey&Company Investment Support and Promotion Agency of Turkey 10

Turkish Bauxite Reserves Aluminum In midstream Turkey has a big gap driven primarily by automotive and construction industries. Net Trade 2010, U. S. $ Billion Bauxite mining + alumina refining Semi production Aluminium smelting 0. 025 Mid-stream production by Aluminum source 2010, thousand metric tons 878 63 150 665 1. 0 -1. 6 Upstream Midstream SOURCE: MTA, Mc. Kinsey&Company Investment Support and Promotion Agency of Turkey Downstream Primary (Seydişehir) Secondary (scrap to aluminum players) Net imports 11

Chromium Turkish Chromium Reserves Turkey has %6 of world production. Worlds 3 rd chromite exporter with %12. 8. Chromium Production Thousand tons Chromium Export 6. 240 5. 100 2003 268 3. 639 8% +114 504 475 U. S. $ Million 253 1. 620 498 27 1. 849 61 104 120 1. 168 2003 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 364 575 847 1. 079 1. 382 Thousand tons SOURCE: MTA, Team Analysis Investment Support and Promotion Agency of Turkey 1. 816 1. 746 2. 258 12

INVESTMENT INCENTIVES IN TURKEY 1. General Incentive System 2. Incentives for Large Scale Investments 3. Regional Incentive System 4. Incentives for Strategic Investments Investment Support and Promotion Agency of Turkey

NEW INCENTIVE SYSTEM 2. Regional Incentives 1. General Incentives 3. Incentives for large-scale Investments 4. Incentives for Strategic Investments ü VAT Exemption ü Custom Duty Exemption ü Tax Deduction ü Employer’s share for insurance premium payment ü Land provision ü Interest Support (except 1 st and 2 nd regions) ü Land provision ü Interest Support ü VAT Refund In the 6 th Investment Region; Support income withholding tax and employee’s share for insurance premium payment and Promotion Agency of Turkey

Regional Incentive Map Investment Support and Promotion Agency of Turkey

SPECIFIC PRIORITY INVESTMENTS Specific Priority Investments to be supported by measures of Region V regardless of the region of the Investment: v Mining investments v Railroad and maritime transportation investments v Test facilities, wind tunnel and similar investments made for automotive, space or defense industries v Tourism investments in Cultural and Preservation and Development Regions determined by the Council of Ministers Decree v Primary, Middle and High School investments by private sector v Specific pharmaceutical and defense industry investments with minimum investment amount of 20 million TL Investment Support and Promotion Agency of Turkey 16

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

STRATEGIC INVESTMENT INCENTIVE SCHEME Investments meeting the criteria below are supported within the framework of the Strategic Investment Incentive Scheme: Ø Having an import of at least 50 million USD for goods to be produced in the last one year period. Ø Realizing the production of intermediate and final goods with high import dependence of which more than 50 % are supplied by import, Ø Having a minimum investment amount of 50 million TL , Ø Creating minimum 40 % added value, Investment Support and Promotion Agency of Turkey 18

APPLICATION OF THE STRATEGIC INVESTMENT Incentives (‘ 000 TL) Investment Amount: 50 Million TL Employment: 100 People Investment Amount: 500 Milyon TL Employment: 1000 People 1. 140 11. 400 7. 000 - 11. 460 25. 000 250. 000 Employer’s Share for Social Security Premium 1. 445 14. 448 Interest Support 2. 500 25. 000 Land Allocation 2. 500 25. 000 Total State Support 33. 285 344. 308 Support Density (%) 67 69 VAT Exemption Custom Duty Exemption VAT Refund Tax Deduction Investment Support and Promotion Agency of Turkey 19

ON Investment Support and Promotion Agency of Turkey 20

THANK YOU FOR YOUR ATTENTION For Questions and Inquiries • Dr. Serdar Altay saltay@invest. gov. tr • Mehmet Tangut mtangut@invest. gov. tr Investment Support and Promotion Agency of Turkey 21