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Land Use Policy 97 (2020) 104784

Contents lists available at ScienceDirect

Land Use Policy


journal homepage: www.elsevier.com/locate/landusepol

Effects of the private land acquisition process and costs on mining T


enterprises before mining operation activities in Turkey
Taşkın Deniz Yıldız
Department of Mining Engineering, Adana Alparslan Türkeş Science and Technology University, Adana, Turkey

ARTICLE INFO ABSTRACT

Keywords: According to the mining legislation in Turkey, different permits must be obtained from the authorized institu-
Cost tions or to reach an agreement with a private landowner according to whether there is private or public land for
Enterprise mining. If the landowner and the mining investor do not agree, the expropriation is conducted if the public
Expropriation interest is observed in the mining operation. There is no doubt that the rights of landowners should be ade-
Investment
quately ensured by legislation. However, there are cases where land ownership problems cannot be solved in
Mining
Property
areas that overlap with mining areas and are subject to private ownership. The expropriation permit process may
sometimes last 1.5–2 years. Therefore, mining enterprises are unable to start production activities and risk losing
their investments. Especially for the reasons related to private landowners and experts, private land acquisition/
expropriation costs for mining activities are quite high compared with the market.
To identify and produce solutions to the legal problems in Turkey, in May, June, and July of 2018, a survey
study was conducted to ask mining enterprises about their problems in private land acquisition and the costs for
them. The mining sector in Turkey expects that all applicable legislations will be proposed in a manner that does
not waste the time of the mining investor and that the private land acquisition/expropriation costs will be
reduced in a manner that does not pose a risk of mining investment. In this respect, the ratio of expropriation
costs to the mining investment amount (MIA) was analyzed according to the different mineral groups and the
social and economic development level of the cities where mining was conducted. Based on this research, leg-
islation practices also have negative effects on mining enterprises, on the expropriation costs and the ex-
propriation permit processes.

1. Introduction areas (e.g., easements) and sometimes expropriation. These rules pro-
vide for the determination of compensation for the use or expropriation
Mine areas and private property land conflicts are frequently ex- of land areas and ultimately avoid conflicts by providing conciliation
perienced1 (Yıldız, 2013). Because mines must be produced on-site, that may be useful for mining operations (Bastida, 2004).
mining of these conflicts requires private land to be purchased, rented, In the legislation between land use, land ownership, and the terri-
or allocated to mining operations through expropriation. torial interests of land use, the perception of good balance is largely
A fundamental principle of traditional mining law is that mining is a linked to the view of sustainable development (Johnson, 2010). Ac-
priority over other land uses. Typically, an assumption is that mines cordingly, in the assessment of mining compensation for compulsory
will produce more value than using a particular piece of land for other land, the applicable laws, and various identifiable interests of pur-
purposes. For this reason, mining should be conducted independently of chased landowners should also be considered2 . It is insufficient to only
the will of the landowner. Of course, this does not mean that the rights pay compensation (Kidido et al., 2015). Additionally, adequate, rapid,
of the landowner are completely taken away. Mineral extraction re- and effective compensation must be provided for relocation of the local
gimes establish rules and procedures to allow access and use of surface community (Asante-Manteaw, 2011).

E-mail address: tdyildiz@atu.edu.tr.


1
See about mining areas and other land-use conflicts and mining area usage in Turkey (Yıldız, 2020a, d). For applications and examples in other world states, see
(Adams and Moon, 2013; Bloodworth et al., 2009; Burke et al., 2015; Corbett et al., 2017; Everingham et al., 2018; Gałaś, 2017; Lopes et al., 2018; Rolfe and Windle,
2015; Rugadya, 2020; Spiegel, 2016; Walcott, 2019; Zhang et al., 2019).
2
There are significant differences between developed and developing countries among countries that accept adequate compensation for expropriated land (Cao
et al., 2018). See related examples USA (Eaton, 1995; Sun, 2013); England (Denyer-Green, 2019; DCLG, 2010); Pakistan (Hull, 2008); India (Mahalingam and Vyas,
2011); Vietnam (Dao, 2010); China (Huang et al., 2017; Zhang and Qiu, 2013; Lin and Ho, 2005; Tan et al., 2009).

https://doi.org/10.1016/j.landusepol.2020.104784
Received 22 March 2019; Received in revised form 7 May 2020; Accepted 22 May 2020
0264-8377/ © 2020 Elsevier Ltd. All rights reserved.
T.D. Yıldız Land Use Policy 97 (2020) 104784

In this context, to conduct mining operations on private lands in “private ownership permits,” is briefly explained.
Turkey, as in many other countries, the relevant legislation primarily In Section 3, what is envisaged by the legislation on private land
requires an agreement with the landowner. If the agreement cannot be acquisition in Turkey is described.
achieved, expropriation is applied. In all of these methods, mining In Section 4, the share of expropriation costs within the MIA of
enterprises are obliged to pay landowners cost/compensation. mining operations is determined; to do so, the mining enterprises were
With the consent of the landowner, the purchase of the private land first asked to report the expropriation costs they paid: "How much is the
by the mining enterprise often results in disputes. Under the influence expropriation cost you have paid so far to perform mining operation activ-
of these and other factors, the land acquisition cost of mining en- ities?" The prices paid by 42 mining enterprises that answered this
terprises is increasing considerably in Turkey through an easement or question were evaluated according to different mineral groups3 . The
direct agreement with the landowner. If land acquisition is not achieved mineral groups stipulated by the legislation in Turkey are presented in
with this method, land acquisition through expropriation is compul- (Table 1).
sory. In this case, the cost of expropriation is determined to be quite To determine the expropriation costs of these 42 mining enterprises
high compared with the market conditions because the valuation cri- according to the different mineral groups in Table 1, the MIA of these
teria defined in Article 11 of the Expropriation Law no. 2942 are not mining enterprises were first learned. In this calculation, the average
considered. In particular, local expert boards tend to fulfill the very values of the expropriation cost range stated in the survey responses
high expectation of the landowner rather than appreciate the income were compared with the total MIA. Thus, average values were calcu-
and market value of the land (Tanrivermis, 2018). In Turkey, private lated for each mineral group.
land purchases and the expropriation of mining enterprises in the re- Mining activities of mining enterprises that answered the survey
gions where the purchase price of land is higher compared with the fair were conducted based on an assessment of where they were conducted
value have been observed (Tanrivermis, 2018; Cagatay and in Turkey. Accordingly, in which cities of Turkey these mining en-
Aliefendioglu, 2019). The reasons for these phenomena have not been terprises operate was not directly asked in the survey4 . Only the social
investigated; thus, an analysis that considers this legislation with an and economic development coefficients of the cities in which the
aim to balance the interests of mining investors and landowners is ne- mining enterprises operate were learned. Thus, as the development
cessary. level of cities increased by using the city coefficients of each mining
Understanding the factors behind the link of property rights to enterprise, a determination was made as to whether the ratio of ex-
natural resources can help build an understanding of the investment propriation costs to MIA changed according to different mineral groups.
and growth of natural resource-extracting sectors (Laing, 2015). One In Section 5, the reasons for the factors that may affect changes in
study found that land access and ownership problems were the most expropriation cost were investigated. In particular, this study aimed to
important problems for mining enterprises when the important issues assess whether legislative practices had an impact. In this respect, an-
for international mining enterprises were ranked according to their other survey question was asked to the mining enterprises, and 34 of 42
importance (Clark and Clark, 1999). For example, according to the mining enterprises responded. These answers were divided into dif-
legislation and practice in Slovenia, an example of a country with ty- ferent topics and then analyzed to determine whether the issues that
pical expropriation legislation and practices, the expropriation right affect the expropriation process and their costs affect mining en-
holder (municipality or state authority) can start expropriation 1 month terprises, landowners, or both, and to what extent they affect them. In
after the attempt to purchase a bid fails (Sumrada et al., 2013). Re- addition, the problems encountered in land acquisition for mining op-
garding that in Turkey, the duration of the permitting process for all erations were identified. Based on the results, these problems may be
private lands, including private property permits and other permits, is the main driver of the increase in expropriation costs, which have a
up to 6 months. The duration of expropriation practices can sometimes high-risk share in mining investments.
be 1.5–2 years; therefore, mining enterprises cannot start production
activities. In addition, high expropriation costs in Turkey, together with
the expropriation permit applications stipulated by the legislation, 2. Private property permits in permitting mining operation
make it compulsory to investigate whether these costs put the mining activities
investments at risk and to propose solutions.
Mining activities comprise multiple processes: exploration is fol-
1.1. Purpose and method lowed by ore production and enrichment and ultimately, the closure of
these workplaces and the environmental regulations implemented fol-
This study aims to calculate the amount of the consideration of paid lowing the depletion of the resource (Legislation Information System,
shares in mining investments in the mining activities necessary for 2019). To conduct mining operation activities in Turkey, as a rule, first
expropriation in Turkey. In addition, this study aims to evaluate these an operating license and then an operation permit must be obtained.
shares according to different mineral groups, determine whether the After obtaining the operating license, a second area, called the pro-
legislation practices in the expropriation process and the landowners duction license area (operation permit area), is determined and is where
play roles in high expropriation costs, and propose mining legislation the activities in the mining operating project are conducted. This area is
practices that put neither the landowners nor the mining investors at always smaller than the operating license area (Gunay, 2016).
risk. The mining operation permit indicates that all permits have been
In line with this objective, the survey was conducted in May, June, obtained for the mines within the operating license area and that there
and July 2018 by using the Survey Monkey program, to identify the are no obstacles to the production of the mine. That is, obtaining the
problems of mining enterprises and to find solutions to these problems. operation permit required for a mining operation can be realized by
In the survey, mining enterprises were asked about the problems they first reducing the operating license areas to proven reserves, namely, by
experienced in expropriation and their expenses on expropriation. narrowing these areas. In the same manner, mining operations can be
Subsequently, the expropriation costs of mining enterprises operating in conducted in the area permitted by the forestry administration, in the
different mineral groups were proportioned to the amount of each field permitted by the EIA, except for short/medium range watershed
mining enterprise. The results were evaluated together with the reg-
ulations, and solution suggestions were presented. In this context, the 3
See the mineral groups stipulated by the Turkish mining legislation (Yıldız,
following method was followed within the scope of the study, respec- 2019).
tively, 4
More precisely, it was thought that the mining enterprises that responded to
In Section 2, the process of permitting mining operations, including the survey would not want this to be explained

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T.D. Yıldız Land Use Policy 97 (2020) 104784

Table 1
Mineral groups in Turkish mining legislation (summary) (Yıldız, 2020c)11.
Ist Group Minerals I (a) Sand and Gravel
I (b) Clays and rocks used in cement and ceramics industries
nd
II Group Minerals II (a) Aggregate rocks and rocks for ready-mix concrete and asphalt
II (b) Dimension stones, Marble, Travertine, Granite, Andesite, Basalt etc.
II (c) Ground/milled rocks for industrial use (Calcite, etc.)
IIIrd Group Minerals Salts (incl. sea, lake, and spring water), CO2 gas (except geothermal, natural gas and petroleum areas, Hydrogen Sulfide
IVth Group Minerals IV (a) Industrial minerals
IV (b) Peat, Lignite, Hard Coal, Anthracite, Asphaltite, Bituminous Schist/Shale Shale, Coccolith/Sapropel
IV (c) Metallic ores, rare earth elements/minerals
IV (ç) Radioactive minerals
Vth Group Minerals Precious and semi-precious stones

remain within the mining license area are as follows: pasturelands,


forest lands, treasury lands, non-cadastral areas, private property lands,
and legal property lands (Kavci, 2014).
Land acquisition or acquisition of rights on land is a critical, in-
dispensable issue for almost all infrastructure and superstructure pro-
jects, and especially for the construction, mining, and energy sectors
(Sezener, 2015). Therefore, first, it is critical to know where the mining
activity area will be established at the planning stage (Kavcı, 2014) and
to know which of the property lands in question overlap with it. In this
Fig. 1. Mining operating/production license area (representative) (Yıldız et al., respect, it is useful to know that mining legislation is envisaged for
2016). conducting these activities before a decision is made to conduct mining
operations on private property.
In the event of an operation request at the end of the mine ex-
protection zones, and in the full production license area (Yıldız et al., ploration activity in Turkey, the purchase of the private property areas
2016) (Fig. 1). within the operating license area shall be made by paying the price
In Fig. 1, the EIA permit area is not the same as the operation permit agreed to by the parties. In case of a failure to reach an agreement, upon
area. Thus, no operation permit is issued for that area because no the request of the licensee, if the Ministry decides that there is a public
proven reserve is found in a part of the EIA permit area after the op- interest, it shall be expropriated in accordance with the provisions of
erating license and EIA permit applications. To obtain an operation Expropriation Law no. 2942 (Kavci, 2014).
permit license, the operating license holder is obliged to obtain all the
following permissions within 3 years (Fig. 2).
In Fig. 2, the operating license holder is granted an operation permit 3.1. Agreement with the owner on private Land
after all these permissions, including the private ownership permits, are
completed. All permits, except for private property permits, are ad- Reaching mining sites and using immovables located or adjacent to
ministrative permits. Private property permits, similar to other permits, mine sites is a necessity for mining activities. This issue is expressed in
are one of the necessary permits to start mining operations, that is, to the world mining law literature with the concept of “access to mining
obtain mining permits. Thus, the private land that overlaps with the land,” one of the most important problems of the mining sector. This
mineral reserve is allocated for mining activities (Yıldız, 2020b). problem is connected to the legal rules varying from country to country
according to the regulation of mining law and real estate law
3. Private land acquisition methods (Topaloglu, 2016a).
For example, in the Republic of South Africa mining rights legisla-
In mining where land is directly affected, various property types are tion provides an example of rights in the land by contacting the gov-
the subject of the field of activity. The types of these properties that can ernment instead of negotiating with the landowner. In extreme cases,

Fig. 2. Permits and licenses necessary for mining operation activities (TUMMER, 2017).

3
T.D. Yıldız Land Use Policy 97 (2020) 104784

acquiring such rights does not require the consent of the landowner. By Expropriation Law for expropriation (e.g., the determination of prop-
contrast, mining enterprises in South Africa generally allocate 3%–5% erty, owner or possessor, appraisal) shall also be followed in easement
of the value of the mine to landowners, which in exceptional cases may practices.
increase to 7% and up to 10 % in diamond mining (Van Heerden et al., The decrease in the value of the immovable property due to the
2015; Hartman et al., 2015). However, in Sudan, the land acquisition establishment of the easement right (expropriation easement fee) is the
process is poorly structured, and there is little clarity about the ap- provision for the easement. To calculate these values, first, the value of
plicable procedures. Rarely, affected communities are consulted (Deng, the immovable is calculated as if there is no easement; the difference
2014). between them shows the value of the easement right (Topaloglu, 2015).
The legislation in Sweden is also remarkable. The protection of According to Article 46 of the Mining Law, the expropriation pro-
expropriation under the Swedish constitution also affects land owner- visions shall not be applied to Group I and Group 2 (a) minerals.
ship. Such protection is that property can be limited only to the basic Therefore, for the extraction of these mineral groups, mining en-
public interests, and the owner must be compensated for surrendering terprises are obliged to agree with the landowners.
the land or for any damage. However, as a result of restrictions imposed
on land use rights, a landowner is not always guaranteed compensation 3.2. Expropriation practice and rights of Real Estate owners
and sometimes may have to endure a certain infringement of the
property right without compensation. The latest amendments to the The establishment of an easement may not necessarily correspond to
Minerals Act provide for a strong public interest in the extraction of the need for mining in all cases. In some cases, it may be necessary to
minerals as necessary to fulfill the constitutional prerequisites for in- use the entire land for mining activities. In this case, the inability to
terfering with the rights of landowners (Johnson, 2010). acquire property from the private property owner necessitates the ex-
Regardless of the system, the rights arising mainly from the world’s propriation (Yıldız, 2012). Expropriation is the process of confiscation
mining licenses provide the owner multiple monopolistic powers for the of all or some of the immovable property in private ownership, pro-
extraction and production of mines on the land. However, these mining vided that the public interest requires the state or other public legal
rights do not entitle the non-mining use of the land where mine is lo- entities to pay the price in advance (TMMOB, 2015). The relevant
cated or required for mining operations (Topaloglu, 2016a). legislation in Turkey is the Expropriation Law, and the Mining Law
In cases where energy transmission lines, conveyor belts, or pipe- implements the principles of this law. The competent authority for
lines are not used for the whole operation of the immovable property, expropriation is the MAPEG, which must implement the relevant law.
administrative easement can be preferred instead of expropriation
(Topaloglu, 2011). In this manner, mine easement can be established to 3.2.1. Rights of the real estate owner in the expropriation application
search for and extract from mines on the land that belong to someone An expropriation decision must be made for the mining owner to
else (Yıldız, 2012). Although the owner of the easement right is the conduct the mining activities. To obtain the expropriation decision, a
owner of the extracted mine, they cannot have the right of ownership decision of public interest is required for the mines (Yıldız, 2012). In
over the mine reserve (Telli, 1989). In general, legal provisions have general, mining laws worldwide recognize that mining activities are of
been introduced to establish easement rights on the land in favor of the public interest. In some countries, mining has such a strong position
mining concessionaire in general, and attempts are made to resolve the that it has an absolute superiority and privilege over other fields of
problems that may arise with the landowners (Topaloglu, 2011). activity. Bolivia, for example, considers that the public interest is in-
Turkish Mining Law also states that the Ministry of Energy and herent to mining and allows expropriation without a public-interest
Natural Resources (MENR) establishes an easement or usufruct rights in decision5 (Topaloğlu, 2011). Even in the European Union, which at-
favor of the miner, who is a private person. Article 46 of the Mining taches more importance to environmental protection than do other
Law No. 3213 has the following provision: “The immovable property countries, it is emphasized that mining can be conducted within the
subject to private property required for operation activities during the op- framework of public interest if certain conditions are fulfilled in almost
erating license phase is expropriated if the parties cannot reach an agreement every region, including special environmental protection zones (TMA,
and upon the request of the owner of the operating license, it is decided that 2011). Of course, expropriation has the public interest on one side and
the ministry has a public interest.” the rights of the expropriated real estate owner on the other side.
The licensee must first enter into an agreement with the proprietor The right to property is a right that gives real or legal persons the
for mining on the basis of private law, such as that for rent, bailment, right to save on the objects in which they possess, but only with the
usufruct, or sale, regarding the use of land. If the licensee cannot reach limitations required by public interest (TMMOB, 2015). Therefore, in a
an agreement with the private property owner, the owner applies for an legal system in which the right to property is subject to a constitutional
administrative easement or mining expropriation through MENR ac- guarantee, there is no doubt that although the expropriation authority
cording to Article 46 of the Mining Law (Topaloglu, 2011, 2016a). The is authorized, mutual rights and benefits are reconciled. With this or-
expropriation right granted through the General Directorate of Mining ientation, before the decision of public interest was made in Article 74
and Petroleum Affairs (MAPEG) is understood from the aforementioned of the Mining Regulation, which entered into force in 2017, it was
statement, that is, this is not the case for the exploration period and is obligatory to investigate certain issues specific to the mining operation
only recognized for the operational phase. stipulated in addition to Article 7 of the Expropriation Law.
Article 7/13 of Mining Law No. 3213 evaluates mining activities at According to this, expropriation is decided by evaluating the fol-
close distances to the immovables subject to ownership and specifies lowing:
places where mining can be conducted with the permission of the
landowner. Accordingly, mining within the area, which is 60 m hor- • The operation project and reserve status of the mine in the area to be
izontal from private buildings and 20 m from courtyards, vineyards, expropriated,
and gardens, is only possible with the permission of the landowner. If • The benefits and damages to the region and the national economy in
the landowner does not give permission within the specified limits, the the absence of the production of the mine in this area,
easement right can be established by MENR pursuant to Article 46 of • The production opportunities according to the reserve status in
the Mining Law.
If an easement is established with the expropriation method for an
immovable property within the scope of private property, the price 5
In Peru, there are examples of the reasonable land prices of mining com-
corresponding to this easement must be paid to the landowner in ad- panies in land acquisition, and the transfer of the people of the region to other
vance (Yildirim, 2006). The procedures and conditions stipulated in the areas. See (Bury, 2005).

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T.D. Yıldız Land Use Policy 97 (2020) 104784

other areas within the license area other than the area to be ex- 3.2.2. “State right” granted to the people of the mining region after
propriated, expropriation
• The alternative production areas in the region, The contributions of the mining industry contribute to economic
• The losses of the property owner, development in the region where mining initiatives occur are critical
• The economic activity to be sustained by the owner after the ex- for the relationship between the mining industry and the local com-
propriation and how it will be affected by the expropriation, and munity (Söderholm and Svahn, 2015).
• All the technical and social factors such as the relations of the area A mine investor in Turkey grants a government right of 1 %–15 % of
to be expropriated with the environment (The Regulation on Mine, the total sales of the ore, which varies according to mineral groups,
Article 74). every year. It is envisaged that 25 % of the state right (royalty) invested
by the holder of the license shall be given to the special administration
No information is in the legislation on how these parameters are of the city where the license is held as a special provincial adminis-
considered in the expropriation decisions on mining in Turkey. In other tration share. Twenty-five percent of the state right -starting from the
words, detailed economic, social, and regional analyses, including nearest village where the license is located- will be transferred directly
economic and social benefit–cost analyses, are not foreseen in the ex- to the account of the related districts or districts, to the Union For
propriation decisions in Turkey but envisaged in public investments Providing Services For Villages, in proportion to their share in the
(Konukman et al., 2016). mining activity area to be used in infrastructure investments limited to
Worldwide, there are various forms of compensation for the land the region where the villages are located. The remaining 50 % of the
purchased. Nevertheless, the determination of the amount of compen- state right is deposited into the Treasury account. Thus, a significant
sation in monetary terms is the valuation process in which values are portion of this money should be used to benefit the local community.
not created but achieved through the application of relevant economic
and legal principles (Ayitey et al., 2006). Of course, the laws in force in 4. Expropriation costs in the mia
the assessment of monetary damage have drawn attention to the var-
ious private interests of the landowners acquired (Kidido et al., 2015). In Turkey, because land is used to conduct mining operations, a
Therefore, the legal regime is a critical factor. mining investor is obliged to pay expenses: expropriation cost, private
In Turkey, introduced by Law No. 5177, dated May 26, 2004, the land cost, forest cost, pasture cost, operating license cost, waste man-
arrangement that promotes the interests of landowners is as follows: “If agement cost, rehabilitation cost, environmental compliance guarantee,
it is determined by the Ministry that the expropriated real estate does not state right, and taxes.
need for mining operations, the owner of the expropriated place shall be “Expropriation costs” and “private land costs” are “compensation
notified that the expropriated place shall be returned to the former owner for land” or “negotiation or transaction costs.” However, these costs can
provided that the fair value to be determined in accordance with the pro- be evaluated under a single name (“private land acquisition costs” or
cedures and principles stipulated in the Expropriation Law shall be paid. If shortly "expropriation costs”) as the sum of all the costs paid by the
the former owner does not want to receive the immovable within 6 months, owners of the private lands where the mine areas overlap, and the total
the immovable will be left to the Treasury.” amount paid as a result of the expropriation if there is no agreement
Here, the immovable property expropriated for mining law and with the landowners. According to the legislation, these costs do not
mining activities is returned to the former owner on the condition that change according to different mineral values, and it is not a state right
the fair value is paid after the activity. If the former owner does not take or a tax paid for the mining area.
the immovable, it was foreseen to transfer this land to the treasury. The To determine the amount of expropriation expenses in Turkey (in-
notable point of this provision is that the real estate owner is given the cluding costs paid in direct agreement with the private landowner), the
opportunity to reclaim the immovable property because this is not in following survey question was asked to the mining enterprises: “What is
the previous legislation in Turkey. the total amount (TL) of expropriation you have paid so far to be able to
All these legislative arrangements in Turkey enable mining activities conduct mining activities?” The distribution of the answers of 42 mining
on private property. However, the rights of the former real estate owner enterprises according to different mineral groups is in Fig. 3.
are also considered, and private property is secured. In Fig. 3, the expropriation costs have high values, particularly in the
4 (b) and 4 (c) mineral groups. Expropriation costs may vary by the

Fig. 3. Costs paid for expropriation by mining enterprises8 (TL)9 .

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T.D. Yıldız Land Use Policy 97 (2020) 104784

Fig. 4. Representation of city coefficients on the "Turkey city map.".

Fig. 5. MIA of mining enterprises until the end of 201710 (TL).

geographic region where mining is conducted. However, according to that the expropriation costs paid by the mining enterprises will have a
the value of mineral groups (e.g., mineral sales amount), expropriation greater impact on mining enterprises as a cost item. The costs paid by
costs should not change to an excessive extent. In this respect, an the mining enterprises that respond individually to the expropriation
evaluation according to where mining enterprises are performing their can be proportional to their current MIA (total before 2018). However,
mining activities in Turkey is useful. For this purpose, city coefficients these mining enterprises are planning to make new investments in 2018
can be used in the calculation of the forest land permit cost, which is and beyond. Accordingly, the following question was asked to mining
predicted the 20th (I) (b) article of "Implementation Regulations of enterprises: “How much is the new MIA targeted for your mining operation
Forest Law Article 16," which entered into force on April 19, 2015, in in 2018 and beyond?” The answers of 42 mining enterprises to this
Turkey. The representation of city coefficients foreseen by the Forest question are presented in Fig. 6 according to different mineral groups.
Regulation for different cities (Annex-3) in Turkey is presented in Fig. 4. The ratio of the expropriation costs paid by the mining enterprises
In Fig. 4, the "city coefficient" increases according to the degree of to the values calculated by adding the new MIA targeted by each
social and economic development of the cities in Turkey. Accordingly, mining enterprise in 2018 and after and the existing MIA before 2018
there are higher forest costs for mining operating activities conducted are presented with their average values in Table 2.
in cities with a high city coefficient. In Table 2, considering the targeted new MIA of mining enterprises
In many countries where the mining and natural stone sector is in 2018 and beyond, the ratio of expropriation costs to the total of
developing, all property permits, including forest permits that paid for current and future MIA is 2.97 % on average for all mineral groups. In
mining activities during the project, do not exceed 2% of the total MIA mining countries worldwide, the expropriation costs and the total costs
(Aydin, 2018; TMA, 2018). However, there are concrete examples in of all types of ownership do not exceed 2% of the amount of the mining
Turkey where this ratio exceeds 40 %–45 % in forestlands (Yöldöz, investment. By contrast, these amounts paid for the expropriation of
2018). private lands, which is one of the items that mining enterprises spend
Similarly, to determine the extent to which the expropriation costs on to start mining production, have a high6 share (on average, close to
of the mining enterprises operating in different geographical regions of 3%) in the sum of the current and future MIA alone.
Turkey have a share in the MIA of each company, the following ques- The average sales value per ton of mines increases partly from the
tion was asked to the mining enterprises: “What is the MIA of your mining 2nd group of minerals to the 4th group of minerals. Notably,
enterprise (until the end of 2017)?” The distribution of 42 answers to this
question by different mineral groups is presented in Fig. 5.
This distribution of MIA shows that mining enterprises in Turkey are 6
The rate does not include the royalties that the mine mentioned above en-
mostly in small and medium-sized enterprises. This finding indicates terprises pay for the socio-economic development of the people

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T.D. Yıldız Land Use Policy 97 (2020) 104784

Fig. 6. New MIA of mining enterprises in 2018 and the future (TL).

Table 2
Ratio of expropriation costs to the total of current and future MIA.
Groups of Minerals Number of mining Average sum of the current Average of expropriation Ratio of the expropriation costs to the sum Average of city
enterprises considered and future MIA (TL) costs (TL) of the current and future MIA & averages coefficients
(%)

2 (a) Group 9 10,916,667 50,000 2.70 2.20


2 (b) Group 11 32,363,636 229,545 1.38 1.75
4 (a) Group 4 435,062,500 100,000 0.05 2.15
4 (b) Group 12 545,979,167 10,908,333 5.19 2.14
4 (c) Group 6 647,541,667 12,600,000 3.80 2.08
For all groups of 42 300,750,000 4,997,024 2.97 2.00
minerals

expropriation costs increase from the 2nd group of minerals to the 4th Turkey (unit prices per m2) may vary. The distribution presented above
group of minerals (Fig. 7). shows that the ratio of expropriation costs to MIA required for mining
In Fig. 7, the average values of expropriation costs for different mi- operations in Turkey does not increase linearly in cities with high city
neral groups show an exponential relationship. The correlation coeffi- coefficients.
cient is R2 = 0.967. Based on this data, there is a strong significance Probably, this moderately exponential exchange relationship be-
between mineral groups and expropriation costs. However, other factors tween these values is particularly related to the number and quality of
that affect the expropriation costs shown in Fig. 7 according to the the private land overlapping with the mining activity area, rather than
mineral groups. Therefore, it is useful to assess whether the ex- the expropriation costs for different mineral groups (this data could not
propriation costs change according to the degree of social and economic be obtained from mining enterprises). However, this change is note-
development of the cities in Turkey. Accordingly, the relationship be- worthy among the values of other group mining enterprises except for 4
tween the "average of city coefficients according to mineral groups" and (a). Notably, 2 (b) group mining enterprises have low city coefficients,
the "average ratio of expropriation costs to MIA" in Table 1 can be and the ratio of expropriation costs to MIA is the lowest. The number
examined (Fig. 8). and quality of the expropriated private land may have been particularly
In Fig. 8, the values for different mineral groups show an ex- effective in the low correlation coefficient from Group 2 to Group 4
ponential change in the correlation coefficient. The correlation coeffi- minerals.
cient is R2 = 0.651. Based on this data, there is a moderate significance
between pre-calculated city coefficients and the expropriation costs. 5. Parameters expropriation process and costs
Several factors can be cited as reasons for this to occur.
Notably, the fair value of land in different regions of the same city in Expropriation is not an unjust enrichment of the owner of the real
estate and does not impoverish it by taking the real estate for a very low
price. As a result of expropriation, the owner of the immovable should
7
The values of the 4 (a) mineral group were not included in this calculation not have the feeling that the immovable property was forcibly taken
because the number of mining enterprises participating in the evaluation was away through an unfair process. The expropriation process should not
low and the values decreased the overall correlation coefficient harm the mining investor who wants to invest. An expropriation pro-
8
> 25 million: 25–50 million Turkish Liras (TL), the average was accepted as
cess should be conducted to determine the expropriation value in a
37.5 million TL.
9 manner that provides a balance between these two situations
1 USD = 4.7236 TL (18th June 2018) (Central Bank of the Republic of
Turkey, 2019). (Tanrivermis, 2018; Cagatay and Aliefendioglu, 2019).
10
500 million TL: 500 million–1 billion TL, i.e., the average was accepted as The heading of this section shows that the expropriation costs re-
750 million TL quired for mining operations are sufficiently high to create mining in-
11
For a detailed version of this summary table, see (Yıldız, 2019; Topaloglu, vestment risk in Turkey. One of the most important factors that cause
2016b). such costs to be so high is the practices and orientations created by the

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T.D. Yıldız Land Use Policy 97 (2020) 104784

Fig. 7. Relationship between the cost of the expropriation and mineral groups.

Table 4
Private land permitting process (TUMMER, 2017).
Stages Owner of the Real Estate - Permit Process of Provincial Directorate of
Agriculture and Forestry

1st Sale or lease of land


2nd Application for the Permission of the Ministry of Agriculture and
Forestry
3rd Preparation of Soil Conservation Project
4th Opinions of the State Hydraulic Works and Museums
5th Non-Agricultural Status Permission

evaluations. A comparative analysis of landowners and mining en-


terprises is presented in Table 3.
In Table 3, the parameters that affect the expropriation process and/
or the expropriation costs mostly have—at different levels—negative
effects on mine investments, but have positive effects on landowners.
Although the majority of these topics may affect both the expropriation
Fig. 8. Relationship between city coefficients and the ratio of expropriation process and the expropriation costs from time to time, they are ex-
costs to MIA. amined separately by considering the dominant issue.

legislation.
For this reason, another question was asked of the mining en- 5.1. Factors affecting the expropriation process
terprises to identify the problems experienced in the expropriations
required for mining operations in Turkey and to find solutions to these Many factors affect the expropriation process required for mining
problems: “Do you have any problems in the expropriation process or do operation activities. Among these, the following issues can be ex-
you have any legislative-implementation suggestions for when you make an amined: "the long-term approval of MAPEG and MENR for the decision
agreement with the private property owner to conduct mining activities?” of public interest in the expropriation process” and "extension of ex-
Thirty-four mining enterprises answered the question with various propriation process of property owners."

Table 3
Comparative analysis of landowners and mining enterprises.
Parameters affecting the expropriation process and Topic affected Positive (+) / negative (-) effect of Positive (+) / negative (-) effect
expropriation costs mining investments on landowners

The duration of the public benefit decision is long Affects "expropriation process" (-)High (+) High
Extension of the expropriation process by property (-) High (+) High
owners
Effect of Olives Law Affects both "the expropriation process" and (-) Moderate / (-) High (+) High
"the expropriation costs."
Experts' inadequacies and wrongly determined (-) Moderate / (-) Moderate (+) Moderate
expropriation costs
Private property prices are costly Affects "expropriation costs." (-) High (+) Very high
Failure to reach an agreement with private owners (-) Very high (+) Very high

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T.D. Yıldız Land Use Policy 97 (2020) 104784

5.1.1. The duration of the public benefit decision is long positive impact on landowners.
The public-interest decision takes a long time to be approved by Mining license holders are obliged to conduct their activities in a
MAPEG and MENR in the expropriation process. The most important manner that will not harm the environment and agricultural lands, and
problem in expropriation practices is that the mining investor cannot restore the places allocated to them during mining activities as a result
start operating activities due to the late expropriation permit. In of rehabilitation activities at the end of the allocation period.
Turkey, the duration of the permitting process of all private lands, in-
cluding private property permits, and other permits, can be up to 6 5.2.2. Experts' inadequacies and wrongly determined expropriation costs
months (Table 4). According to Article 11 of the Expropriation Law, the expert board
In Table 4, the sale or rental of land is insufficient for mining ac- will go to the location of the immovable property or resource, accom-
tivities in Turkey. In addition, the Non-Agricultural Use Permit appli- panied by the court committee, and listen to the immovable owners.
cation should be made to the Provincial Directorate of Agriculture and Subsequently, based on other objective measures that will be effective
Forestry for the land to be mined. First, a soil conservation project is in determining the value of the immovable property or its source,
prepared for this permission, and if necessary, opinions are obtained provided that the following articles are explained, it shall specify the
from the General Directorate of the State Hydraulic Works and the answers of all these elements separately and consider the declaration of
Ministry of Culture and Tourism. All these processes take approximately the concerned persons. They then determine the value of the im-
6 months on average. movable property based on a justified assessment report in accordance
However, in Turkey, many mining enterprises may not obtain per- with the valuation standards adopted by the Capital Markets Board.
mission for expropriation for 2.5–3 years after obtaining a mining op- In Article 11 (3) of the aforementioned Law, a provision which says,
erating license. Notably, the expropriation process of the land subject to “In the valuation of the immovable property, the appreciation to be caused
private property can take as long as 5–10 years (TMA, 2018). This issue by the proceedings of zoning and service, and the profit to be brought de-
can be explained by the following application: All landowners should be pending on the usage forms intended for the future are not considered”
notified in the expropriation required for the mining activities. For (Expropriation Law). Despite this provision, for example, during the
example, notifying a village with more than one hundred households expropriation process of a gold mine operation in Elazig, 50 % objective
requires a considerable amount of time. In addition, the completion of appreciation was applied by considering the recent sale prices of many
expropriation in tens of disputes may take approximately 2.5–3 years parcels of land where mining activities were planned. However, the
after obtaining a mining operating license (Topaloglu, 2018). appreciation caused by mining activities should not be considered in
In conclusion, this parameter has a negative impact on mining in- the valuation (Cagatay and Aliefendioglu, 2019).
vestments but a positive effect on landowners. Additionally, in determining the expropriation value, the experts
tend to determine the high value by using the retail purchase prices
5.1.2. Extension of expropriation process by property owners (except withholding and other legal cuts) instead of the wholesale
The bureaucratic process of expropriation is long. In addition, if prices of the products that are commonly grown on the land and the
private properties are multi-partnered or have successors, the failure to land purchase–sale values realized at the local level. Under these con-
reach an agreement with all partners further extends the expropriation ditions, land expropriation for mining inevitably increases several times
process. Additionally, in case of a disagreement with property owners, compared with the local market conditions, and high land prices result
during the expropriation process, it becomes sometimes impossible to in difficulties for mining companies (Tanrivermis, 2018).
obtain the necessary identification information and addresses of the Expropriation is a long and difficult process. Disputes between the
property owners for notification. In this respect, the Civil Registry mining license holder and the landowner are often brought to court.
should provide information through MENR, the relevant ministry, even The problems of determining the competent authority to conduct the
if it does not provide direct information to the mining enterprises on the expropriation process in the cities and the lack of experienced per-
relevant information of the property owners. sonnel in this regard arise. This causes both the wrong determination of
As a result, this issue has a (high) degree of negative impact on mine the expropriation costs and the delay of the expropriation process if the
investments but a (high) degree of positive impact on landowners. landowners submit the dispute to the court. Therefore, the inadequacies
of the experts and the determination of incorrect costs have a (mod-
5.2. Parameters affecting the expropriation process and the expropriation erately) negative impact on mine investments in terms of the ex-
costs propriation process but have a (low degree) positive impact in terms of
the expropriation costs. However, they affect the landowners negatively
5.2.1. Effects of the olive law (low degree). The resolution process of such disputes with the official
A large part of the fields where the mining projects are conducted in arbitration institutions can be accelerated.
Turkey is located on private-registered lands. Additionally, a significant As a result, the inadequacies of the experts and defective price de-
portion of these lands is registered as “field” or “olive groves” in the terminations have a (moderately) negative effect on mine investments
“Land Registry Records” (TGNA, 2010). In 1995, as a result of the both in terms of expropriation process and in terms of expropriation
amendment in a paragraph of Article 20 (1) of the Law on Breeding of costs and have a positive effect on landowners.
Olive Cultivation and the Vaccination of Wild Animals, the provision
“No facility that leaves chemical waste which prevents the vegetative and 5.3. Parameters affecting expropriation costs
generative development of olive gloves, excluding olive oil factory, and
causes dust and smoke can be built or operated within olive grove fields and Expropriation costs are affected by factors such as land prices in the
at least a distance of 3 km from these fields” is envisaged. region where the mining operation is conducted. Considering the de-
However, in practice, mining is not allowed within a distance of gree of social and economic development of cities, these costs were
3 km without examining whether the mining to be conducted will examined in the title of this subsection. In this subsection, the factors
prevent the vegetative and generative development of olive groves other than the degree of the social and economic development of the
(TUMMER, 2010). With the effect of this provision, in these places, the cities and the fair land price prices are mentioned, because the region of
purchase price is very high because the land is negotiated with private each mining operation differs, and no other data can provide an overall
property owners and the process is prolonged before starting mining assessment.
operations. As a result, "the Effect of the Olive Law" is moderately ne-
gative in terms of the expropriation process of mine investments and 5.3.1. Private property prices are costly
highly negative in terms of expropriation costs; however, it has a high In almost all mining operations, private landowners often declare

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T.D. Yıldız Land Use Policy 97 (2020) 104784

that the expropriation value is low, and this is subjective. Notably, large share of the MIA of mining enterprises. Expropriation costs in-
different interest groups also support reporting injustices at the local crease from the 2nd group to the 4th group minerals. This increase is
level (Tanrivermis, 2018). As a result, property owners within the influenced by the degree of social and economic development of the
mining operating license area often think of themselves as stakeholders. city in which mining is conducted (hence the increase in the fair value
In addition, private property owners demand the fair value of the real of land in developed cities), and the change in the value of the mineral
estate they want to buy in the metropolitan areas from the mining groups. When moving from the 2nd group of minerals to the 4th group
enterprises for the land they have neither visited nor planted for 15–20 minerals, the correlation coefficient between “the ratio of expropriation
years. costs to the MIA” and “the city coefficient” is low. As a reason for this is
In addition, the owners of the immovable property desire to find that the number and quality of the expropriated private land—data
employment opportunities in mining enterprises and to earn an income unknown—may be particularly effective. Nevertheless, the results show
or receive unrequited assistance and support from mine-based business a significant relationship change in these parameters. In particular,
areas in addition to receiving compensation in case their property is excessive increases in private property costs occur as a result of the
sold (Tanrivermis, 2018). failure to reach an agreement with private owners and paying private
Under the influence of all these factors, this parameter has a (high) owners more than their value (to ensure optimum mining operation
degree of negative impact on mine investments has a (very high) po- conditions).
sitive impact on landowners. First, precedent and equivalent pricing In the event that no agreement can be made with the proprietor and
should be fair in the consideration of fair values for immovables pur- in the acquisition of land through expropriation, the experts determine
chased for mining. Of course, the appraisal of the expropriation, ac- the value of the immovable property rather than learn the market value
cording to the Mining Law, is a critical issue for the private property of the land (contrary to the legislation), associate the objective value
owner. However, if a certain portion of the income to be generated from increase with the mining activities, and determine very high prices
the exploitation of the mine reserve in the immovable subject to ex- compared with the market conditions. Notably, the increase in ex-
propriation is based on the valuation of the asset, this practice would be propriation costs in precious mineral groups clearly reveals this situa-
wrong. tion.
According to Article 168 that entered into force in the 1982 Turkish As a result, legislation application regarding expropriation is one of
Constitution and Article 4 of Mining Law No. 3213, mines are under the the most important reasons for the high expropriation costs forced on
rule of the state, namely, mines are in the public domain. Therefore, the mining investor. The expropriation process takes a long time be-
mines in immovable property subject to private property are not related cause of externalities created by the legislation. The expropriation
to the ownership of the land. Landowners do not have the right to process is very long because of the implementation of the legislation.
benefit from the mines (Topaloglu, 2011). Concerning land ownership in mining projects, first, the public-interest
However, as a result of expropriation, the rights of mining en- decisions should be made according to objective criteria, and these
terprises and landowners should be balanced (Gulan, 2008). In Turkey, criteria should be predictable by the mining investor.
where the dominality system is adopted, the mines are under the rule Because shortening the administrative and judicial stages or periods
and disposition of the state and do not depend on the ownership of the of expropriation processes is critical for the realization of the mining
supply. In this respect, the owner of the immovable property cannot ask investments, it is appropriate to regulate the legislation accordingly.
for a share of the operating income because of the occurrence of the The prolongation of the expropriation process increases the aforemen-
mine on his/her immovable which he/she is not authorized to exploit. tioned average expropriation costs, and the cost of permissible delays
However, because the mine is located on that immovable property, the and other investment costs which cannot be easily calculated increase
expropriation of the landowner’s property through expropriation cre- the overall risk of mining investment.
ates a negative situation. For these reasons, Topaloglu argues that a For this reason, a maximum period of 6 months should be set for
reasonable increase in the determination of the value of the immovable expropriation if no agreement can be made with the private property
will be an appropriate solution to the balance of interests by con- owner, considering the problems in the mining sector due to ex-
sidering the asset in the immovable to be expropriated as an objective propriation. During this period, a Commission, including MAPEG,
value increasing factor. The approach of the Supreme Court in similar should be established to complete the expropriation process.
cases in Turkey is also in this direction (Topaloglu, 2011). The survey responses from the mining enterprises show that some
parameters are affecting the expropriation process, expropriation costs,
5.3.2. Failure to reach an agreement with private owners or both. Correcting the legislative problems of these and similar issues
If no agreement can be reached with private property owners, may reduce the risks of mining investors operating in different mineral
property owners may request hundreds of times the value of their land groups to a certain extent and enable landowners and people of the
from miners. Thus, the expropriation process takes a long time and is region to receive financial support and more qualified rights as the
unbearable. mining investments take place.
For example, as in the 1st group of minerals, because the ex-
propriation cannot be made in the 2 (a) group of mines in accordance Author statement
with the legislation, an agreement is requested with the landowners.
Therefore, there is often disagreement with landowners. As explained, a During the preparation and revisions of this article and finalizing it,
similar situation was experienced with the effect of the Olive Law. This I have made all the study alone.
leads to the formation of operation areas according to private land
ownership conditions rather than a plan-project. In this case, private Appendix A. Supplementary data
property owners are paid more than their value to ensure optimum
operating conditions. This results in excessive increases in private Supplementary material related to this article can be found, in the
property costs. As a result, this issue has a (very high) negative impact online version, at doi:https://doi.org/10.1016/j.landusepol.2020.
on mining investments but a (very high) positive impact on landowners. 104784.

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