Turkey doubles gold output in 2011

By bne IntelliNews February 6, 2012

bne -

Turkey extracted 24.4 tonnes of gold from the ground in 2011, 43% more than in 2010, reports the Anatolian News Agency. The figures only add more weight to suggestions that the gold mining sector is ripe for significant expansion, and could even develop into an important export industry.

At current prices, output last year was worth nearly $1.37bn, illustrating the rapid expansion of the gold mining segment amidst huge demand in the country. It was only in 2001 that Turkey struggled to extract more than 1.4 tonnes, but output has risen steadily every year since.

Despite the continued boost, import figures illustrate just how much market share domestic miners are yet to seize. According to Umit Akdur, the chairman of the Gold Miners Association, the annual average for gold imports still stands at 151 tonnes. In the last 17 years, 2,573 tonnes of gold were imported, and demand is steadily increasing.

"Only 10% of Turkey's 6,500 tonnes of gold mine potential has been brought out yet. The remaining 90% is waiting to be discovered. In order to do that $10bn to $12bn must be spent," Akdur said, noting that a lack of infrastructure holds back Turkey's significant potential as a gold producer.

The demand for gold in Turkey is increasing as the popularity of gold-backed accounts rises, reflecting a lack - or difference - of faith in the banking system. For years, many Turks, especially in the east of the country, have kept their money under the mattress. Since Turkey has moved to restructure its banking system, and introduced sharia-compliant banks, much of that money has begun to be deposited. Yet a certain distrust remains.

"Gold mutual funds have seen an increase in Turkey as well as gold accounts at the banks," Akdur points out. "There are 140 tonnes of gold in the country's gold-backed accounts. Turkey is the third country in the highest amount of gold purchases per capita after India and Saudi Arabia."

The industry lobbyist claims that with a boost to infrastructure investment, Turkey could even turn itself into an exporter rather than importer eventually, suggesting such a move could also play a part in closing Turkey's massive current account deficit, which is about 10% of GDP right now.

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