How can the state rights be calculated by considering a high share of state right in mining operating costs in Turkey?

As it is applied in many world countries, state right is also charged for each production after mining activities in Turkey. State right is charged at varying rates according to mineral groups. In the development of mining legislation, these rates and state right calculation methods also underwent a change. The most important among these is switching to the method of demanding state rights over pit sale price instead of the method of demanding state rights over annual operating balance sheet gross profit in Turkey since 2004. As a result, despite the incentive discounts in the state right rates of mineral groups, the state right rates increased several times. The state brought an increase in the state right rates of metallic minerals in particular by considering the decrease in the number of mining operation permits in the last yearsAccording to the latest legislation, state rights are charged at rates varying between 0.5 and 18.75% according to mineral groups. Envisaging the determination of the equal pit sale price in state rights and granting the administration the discretionary power on this issue also creates a hidden increase in these rates. All these increases enabled the state to charge more state rights from the mining sector. State rights accrual based on US$ increased 8 times from 2004 to 2019, and similar to 4 times per one mining operation permit. However, it is reported as news in the Turkish public that mining enterprises only give a 2-4% of share as a state right and do not make any other contributions apart from this. By using SurveyMonkey, permanent supervisors working in the mining enterprises were asked questions how much the share of state rights paid by the enterprises actually were. The state right cost of each mining enterprise was proportioned to the average annual operating costs of these mining enterprises. The results, along with varying based on the different mineral groups, show that the state rights take a high degree of share in mining operating costs in Turkey. In addition, the state right rates in Turkey are quite high compared to other countries in the world that charge state rights over the pit sale prices. Above all, not only the state right in Turkey but when considered with all land-use fees charged from mining operating activities, enterprises economically have difficulties with maintaining the operability of available mining investments in the presence of these costs they pay. For these reasons, in this study, considering the applications in other world countries regarding the state right rates and calculation methods envisaged in the legislation, solutions are put forward. If a discount is made at reasonable rates in other fees paid by mining enterprises, perhaps there will be no need to make discounts in state right rates. However, not giving an increase in state right rates is suggested.

Automated summary

In Turkey, state rights charged on production after mining activities have been increased significantly since 2004, with changes made to the calculation methods resulting in higher costs for mining enterprises. State rights now make up a significant portion of mining operating costs, with rates in Turkey higher than in other countries that charge state rights based on pit sale prices.