858 Following

Images Not Found!

Subscription Form

November 27, 2008

Specialists from Turkey and around the world will gather today at İstanbul’s Swissotel The Bosphorus for the first International Gold Summit, organized by Active Academy, to discuss the latest developments and future expectations of the Turkish precious metals sector.

Though the summit will attract all facets of Turkey’s precious metals sector, we talked to İstanbul Gold Exchange (İAB) Deputy Chairman Osman Saraç about the current situation of the Turkish gold and jewelry sector.

table4          table3

Saraç said that according to the Ministry of Energy, there are approximately 700 tons of gold reserves in government-licensed mining fields across Turkey. “On the other hand,” he said, “scientists estimate Turkey has potentially 6,500 tons of gold reserves underground.”

The yearly production of gold from mining operations, however, is not high, he explained — around 10 tons per year. That hardly meets Turkey’s huge gold demand, which totals around 200 tons annually. “We need to import gold from abroad to make up the difference,” Saraç said.

Saraç also mentioned that Turkish jewelry exports have increased considerably in the past decade. “Turkey has jumped the class in the list of countries involved in the gold and diamond trade,” Saraç said, adding that Turkey has made the list for the top five countries in the world for jewelry manufacturing.

Unfortunately, the jewelry industry does not fully utilize its production facilities to capacity. It has the capacity to process 400 tons of gold and 200 tons of silver into jewelry annually. “Many industry observers consider Turkey a close competitor to Italy today,” Saraç noted.

The precious metals and jewelry industry is one of the biggest manufacturing sectors in Turkey. It employs about 250,000 people and is dominated by 50 major companies. Though İstanbul comes first in jewelry manufacturing, other cities such as Ankara and İzmir continue to be significant players.

“The İAB, established in 1995, provides most-needed logistical support to the industry’s development by offering a state-sanctioned venue for raw materials trade at international prices,” Saraç explained. In addition to this, there are two gold refineries in Turkey that trade gold bullion through the İAB.

The sector recently has become a significant player in the export industry and has grown rapidly. While the export value of jewelry produced from gold was $2.8 million in 1992, this number reached $1.17 billion with 85.8 tons in 2006, according to government statistics. “If we include the number of tourists and travelers who purchase gold and jewelry, the total amount goes as high as 150 tons a year,” Saraç said. “Today Turkish jewelry, created by the latest technology and modern design, is one of the most sought-after products in more than 141 countries.”

According to Saraç, the İAB plays a critical role in representing the gold and jewelry industry in the domestic financial market. The most important function of the İAB is to secure and supply raw materials to hundreds of jewelry manufacturers. It is also a venue through which buyers are extended credit to buy and refine raw materials and later pay it back to suppliers. The exchange also serves as a mechanism with which buyers and sellers can track last-minute price changes in precious metals.

Saraç said, however, that only a handful of jewelry companies are being traded at the İstanbul Stock Exchange (İMKB). He wants to see more companies listed on the İMKB and become publicly traded companies. “This is important as the jewelry industry does not utilize the full potential of the financial market in Turkey,” he said. Saraç said the İMKB and the İAB have organized joint informative seminars for jewelry companies who would like to see their companies listed on the course in the future. He believes this would make companies more professional and would provide a boost in becoming globally traded firms.

Saraç complained about the high taxes applied to the jewelry industry, especially the private consumption tax (ÖTV), which takes 20 percent in the trade of gemstones. “While Turkey closely follows Italy in jewelry exports, high taxes adversely impact the sector,” Saraç said. He also believes this is one of the reasons the unregistered jewelry business is still active in Turkey.

When asked for future plans, Saraç said, “We are planning to transform the İAB into an exchange bourse that not only trades precious metals but also trades precious stones like diamonds. … If the government reduces the 20 percent ÖTV, that would give a boost to the jewelry industry.” Saraç stressed that his goal is to make the İAB the most important exchange market for jewelry traders in Turkey.

Member firms of the İAB can watch developments in the market 24 hours a day through a service provided exclusively to members and can also place orders online with remote access.

The İAB is sponsoring the first International Gold Summit, which Saraç believes will help develop the industry’s potential and strengthen the position of Turkey’s precious metals market in the world.


Leave a Reply

Your email address will not be published. Required fields are marked *