Isabel and I have been wondering whether it is time to move east. The world seems to be — well at least the wealth is. Gold statistics are showing the swing very clearly. This is boosting some gold markets quite unexpectedly. For instance, Turkey is emerging as a strong player in Russia's booming jewellery trade. An increase in business that might also help Turkey's gold miners and explorers.
There is nice clutch of companies with licences in Turkey. All the international ones seem to have sweet names. Eldorado Gold, Eurasian Minerals, Anatolia Minerals, Ariana Resources, Cloudbreak and Odyssey. The prime major over there, Newmont, sold its licences a while back. Discouraged by the old unfriendly mining laws, it decided to operate there through the local Turkish companies.
Environmental protests at cyanide use
Help is badly needed. Crucially, the chance to boost Turkey's gold output could bring a resolution to the Turkish gold industry's cyanide problem. There has been acute local concern at the health risks of its use in leaching gold from the crushed ore. Eleven mining companies are under siege from environmentalists and 24 NGOs. Mines in the Kaz mountains, in the northern Aegean region, are the main target. In fact, several mines have been closed after local protests and panics. It has got as far as the courts.
Turkey is just one of many countries in which the miners are encountering opposition. International objections to some mining techniques are rising globally. The lead is coming from international environmental lobby groups, such as Friends of the Earth. The focus is on preventing the destruction of habitats, felling of trees and water and land pollution.
Facing losses in revenues, the government in Turkey is seeking a solution. At the moment Turkey is importing around $5bn worth of gold per annum. In the ground there is reported to be 6,500 tonnes of the stuff. Yet the miners are only digging out something like ten tonnes a year.
Bad publicity discourages investors
Turkey may be one of the last under-explored high potential countries for gold. But no one is going to rush in with so much bad publicity around. Facing up to a vocal and litigious group of NGOs is not a situation that appeals to investors!
So, October was an extremely busy month for meetings between parliamentary deputies, the protesters and mining engineers. The pressure is on to thrash out a solution.
Turkey's Chamber of Mining Engineers says that 85% of the world's gold leaching is done with cyanide. While cyanide is very highly toxic, there is usually no economic alternative solvent. Used with the proper controls, it maintains, there is no problem. The environmentalists are less sanguine.
They are also more cynical. Turkey’s Daily News reports the scepticism of Professor Goksel Demirer, head of the environmental engineering department at Middle East Technical University. ‘When was any of the country’s waste management handled well?’, he reportedly asked.
Unhappily for the miners, it can’t be said that the government is handling the situation smoothly. An enquiry held by the Department of the Environment said there was absolutely no pollution. But a drama seems in the making. The Energy Minister claimed on NTV that "foreign powers" were behind the protests. Apparently he had other gold producers in mind.
To add even more heat to the battle, the mining companies seem to be falling out with each other. Newspaper ads denying that the mines do harm have been placed. Apparently, this was done without full consultation with the mining companies. Not all the mining companies liked what they read. A real and likely solution has yet to emerge.
Gold is very much part of Turkish culture. Turkey follows the eastern tradition of gold gifts for all major occasions in life — birth, weddings, and so on. In domestic financial crises women sell their gold bracelets to help the family coffers. The country usually features among the top ten gold consumers.
Gold exports could be worth $1bn
Gold has been a popular tourist purchase, too. In Turkey it is easy to see the mark-up and negotiate. Jewellery is sold by weight, with workman’s cost added.
When it came to exports, the US was always the main focus. Italy was another good market. A blow to this business came last year. As the gold price started to rise, US and Italian importers were unhappy about changing their terms. So, Turkish jewellers decided to look around.
Just next door is an increasingly wealthy Russia. The towns are full of small shops and businesses with rising numbers of rich customers. Turkish jewellery design is interestingly different. Such is its appeal that Turkey’s jewellery exports to Russia rose by nearly 300% in the first half of 2007.
The United Arab Emirates is also proving a good market. As a result Turkey hopes for an overall export increase from last year’s 85 tonnes to 100 tonnes. That could be worth over $1bn in export revenues.
If it can sort out its problems, Turkey has now found enough new markets to keep its miners busy for a long, long time.
Keep mining!
Erin and Isabel
