The impact of high land use costs and mining royalties on mining operating costs in Turkey

In Turkey, mining companies are required to pay various types of forest fees to the forestry administration, as well as environmental compliance fees, state rights, and operating license fees to the relevant mining and environmental authorities. Rehabilitation and waste management costs, in contrast, are not fees calculated and collected directly by public authorities; rather, they are expenditures incurred by mining companies to fulfill their regulatory obligations. In recent years, legislative changes in Turkey concerning the calculation methods for land use fees and mining royalties required for mining operations have adversely affected the mining sector and reduced the attractiveness of mining investments. Therefore, assessing the economic feasibility of mining requires an integrated approach that considers the total financial burden imposed on mining companies rather than evaluating individual fees separately. To address this issue, data on various land use fees, operating costs, and other relevant parameters were collected from mining companies through the SurveyMonkey program. This analysis was motivated by the limited publicly available information on the actual magnitude of land use costs incurred by mining companies and the possibility that mining and environmental authorities may assess individual fees separately without considering their cumulative financial burden. Accordingly, this study evaluates land use fees and mining royalties in Turkey both individually and collectively, calculating their values per tonne of mineral production, per hectare of land, and on an annual basis. The ratios of these costs to mining operating costs were subsequently determined. The results indicate that the average land use cost is €1.65 ton⁻¹ year⁻¹ of mineral production and €3440.7 ha⁻¹ year⁻¹ of land used, while the combined land use fees included in the analysis account for 29.15% of total operating costs. Forest fees constitute the largest individual component, accounting for 8.39% of operating costs. In particular, revising the calculation methodology for forest fees and reducing the resulting financial burden could improve the economic feasibility and competitiveness of mining operations in Turkey.