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Considering the recent increase in license fees in Turkey, how can the negative effect of the fees on the mining operating costs be reduced?

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  • Yıldız, Taşkın Deniz

Abstract

In Turkey, for mining enterprises to realize their activities and conduct mining production, they are obliged to pay operating license fees annually. This obligation starts from the date of operating license application, about 1–1.5 years before the enterprises obtain a production permit. In recent years, an increase in the operating license fees has occurred as a result of the amendments made in the mining legislation. These increases made in the fees might become revenue loss in the forthcoming years despite creating an increase in the revenues of the state. In Turkey, according to Law No.7164 came into force in 2019, mineral groups, operating license areas and periods are considered in the calculation of operating license fee. In this direction, these factors in the fee calculation were used in the calculations by means of the answers given by enterprises through SurveyMonkey program. These fees paid to start from the mining operating license application to obtaining an operation permit are included in the investment cost. These costs were proportioned to the investment costs of the enterprises. Fees paid after obtaining an operation permit are operating costs. And, these fees were proportioned to the operating costs of the enterprises. Also, operating license fees per hectare were calculated. All these data were compared for the legislation periods 2005–2015, 2016–2019, 2020 and after in Turkey. An increase of 98% on average on US$ basis has arisen in these fees in 2020 compared to the legislation period 2016–2019 due to the new formula foreseen particularly in the calculation of operating license fees. Also, mining enterprises paid these fees 3.5% more on US$ basis in 2021 compared to 2020 due to the license period being considered in the new calculation formula. Although the rate of increase decreases every year, increases close to this rate will emerge. Mining enterprises should be responsible for the calculation method and conditions of operating license fee that is valid on the date when operating licenses are obtained. And, they should annually pay operating license fees according to this method. Considering that enterprises pay high fees for other land uses too, the increasing license fees should be demanded from enterprises in the direction that they will not create mining cost risk and that the state will charge the optimum fee. If there will not be discounts in the other fees required from enterprises, in line with the expectation of the mining sector, the operating license fee calculation methods in the previous legislation periods can be applied. This fee may not be taken before the operation permit. Or, even if the current operating license fee formula is applied, changes can be made in the critera used in the formula. Within the scope, if permit area is used instead of license area in the calculation, operating license fees will be calculated ∼50–55% deducted.

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  • Yıldız, Taşkın Deniz, 2022. "Considering the recent increase in license fees in Turkey, how can the negative effect of the fees on the mining operating costs be reduced?," Resources Policy, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:jrpoli:v:77:y:2022:i:c:s030142072200109x
    DOI: 10.1016/j.resourpol.2022.102660
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