Park Elektrik ceased its copper mining activities in 2017 and changed its main field of activity by purchasing 100% of the shares of Konya Ilgın Elektrik Üretim San. ve Tic. A.Ş. (“Konya Ilgın”) to operate in the electricity generation sector. Therefore, our Company does not currently have any copper production activity. Konya Ilgın, which is wholly owned subsidiary of our Company, has a project to establish an integrated thermal power plant with an installed capacity of 500 MW in Ilgın district of Konya.
Our subsidiary Konya Ilgın had planned to start the construction of the power plant at the beginning of 2019, based on pre-schedule of Konya Ilgın Thermal Power Plant Project. As it is known, in 2018 an exchange rate shock occurred in Turkey that changed the main dynamics of the electricity generation sector and electricity prices dropped dramatically because of that unpredictable shock. Due to this exchange rate fluctuation, the investment environment in the electricity sector which largely depends on foreign currency for both investment and financing processes has deteriorated significantly. Following the shock, the Covid-19 pandemic which affected the whole world in 2020, has influenced the Turkish economy in a situation which the conjuncture experienced with the exchange rate increase in 2018 could not be overcome yet, and the negative impact of the pandemic on both the general economy and the energy sector has reached to noteworthy dimensions. Lastly, as of the last quarter of 2021, the increase in the demand of oil and natural gas due to the acceleration of economic growth in the world with the diminish of the effect of Covid-19, the uncertainty about when the conflicts between Ukraine and Russia will end, and the existing and possible sanctions including energy commodities of countries in the same period, has led to significant increases in the prices of energy commodities on a global scale and in our country and leads to a new energy supply crisis. The energy crisis has caused the public authority to switch from a policy of prioritizing domestic resources in electricity production to a policy set in which supply security is prioritized, and electricity price increases are not reflected to end-consumers as much as possible.
Konya Ilgın Thermal Power Plant Project is a greenfield investment project, the timing of which is affected by many factors such as the path of the Turkish Lira against the US Dollar, supply and demand of electricity in market, electricity prices and incentives provided to renewable energy resources and domestic resources.
In summary, after 2018, due to not being able to foresee future because of economic and global developments out of our Company’s control explained above, except renewable energy investments the investment conditions in the electricity generation sector have deteriorated significantly in Turkey. Therefore, the power plant construction phase has not started as of today. The completion process after the start of the construction is planned to take approximately 3,5 years.
As of today, our subsidiary Konya Ilgın started to carry out a preliminary mining activity plan at the mining field located in Ilgın district in order to get prepared for the main mining plan that will be applied when the power plant becomes operational. Lignite coal is being produced from the mining site. Moreover, the bauxite mining field located at Islahiye district of Gaziantep, for which our Company has operating license, is being operated by CTC Enerji Madencilik Sanayi ve Ticaret A.Ş. based on a royalty agreement and our Company earns royalty income within the scope of this agreement. You can access detailed information about our Company’s current mining activities from our financial reports published on the Public Disclosure Platform.
Basic information about Konya Ilgın Thermal Power Plant Project is shown in the table below:
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Project & Location |
Ilgın Thermal Power Plant - Konya / Ilgın |
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Type of Plant |
Thermal – Fluid Bed Combustion |
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Installed Capacity |
500 MW |
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Type of Fuel |
Domestic Coal / Fuel Oil |
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Estimated Cost |
The total power plant investment is estimated to be approximately USD 650 million considering the main power plant investment (approximately USD 600mn) and auxiliary investment expenditures (switchgears, water intake plant, ash dam etc.) |
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Estimated Average Electricity Generation Amount (Gross) |
3,800,000,000 KWh / Year |
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Estimated Coal Consumption Amount |
About 3.5 million tonnes / Year |
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Construction Duration |
43 months (about 3,5 years) |
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Easement Period |
49 years in order to establish an electricity generation facility at the power plant site. (The right of easement was obtained on 27 February 2013.) |
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Coal License Period (License numbered 2444) |
IV. Group (B) mining operation license covering an area of 1.865,42 hectares and valid until 4 March 2043. (The field is on temporary holiday until 23 October 2024.) |
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Coal License Period (License numbered 1247) |
IV. Group (B) mining operation license covering an area of 5.649,65 hectares and valid until 21 June 2026. |
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Environmental Permit and License Certificate |
Currently, Konya Ilgın which carries out mining activities in the field with license number 1247, has an Environmental Permit and License Certificate valid until 1 July 2026. |
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Royalty Contract Period (License Numbered 1247) |
A royalty contract covering an area of 5.649,65 hectares is valid until 9 April 2032. There is a minimum production commitment of 300,000 tonnes per year. |
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Estimated Reserve/Resource Amount |
According to UMREK (2023) report, is estimated that there is a total of approximately 193.7mn tonnes of coal resource in the fields with license number 1247 ve 2444. The average lower calorific value of the coal in those fields is approximately 2,022 kcal/kg. |
The power plant planned to be established in Ilgın district will use the lignite coal as fuel, which will be produced from the field with license number 1247 operated by our subsidiary with a royalty agreement and the field with license number 2444 for which Konya Ilgın has the operating license, adjacent to 1247 field. It is expected to reach an annual coal production volume of approximately 3.5 million tons during the operating period of the power plant which is planned to have an installed capacity of 500 MW.
On the other hand, considering that the construction phase of the power plant has not started yet and the process after the start of the construction of the power plant will take approximately 3.5 years, a preliminary mining activity plan was put into action in this transition period to get ready for the main mining activity. Because technically it is not possible to store coal for a long time the coal produced in the transition period is sold to customers. The current preliminary mining activity plan covers the period of June 2019-December 2027 and Konya Ilgın aims to perform 47.8 million m3 of stripping activity and produce approximately 2,3 million tonnes of coal during this period.
Because Konya Ilgın’s main business model is based on electricity generation and coal selling activity is limited with preliminary mining activity plan period, there is no performance target for the coal production and sales activity which is carried out in a very limited volume compared to main mining planning. The main purpose of the planning is to get prepared for the main mining activity, which will require a 30-year coal production of approximately 3.5 million tons/year, during the operational period of power plant.
As of today, there is no definite decision taken regarding the start of construction. The necessary explanations will be made on the Public Disclosure Platform in case of an important development regarding the power plant construction.
Following the acquisition of our subsidiary Konya Ilgın in 2017, the developments in macroeconomic parameters in our country since 2018 and the global pandemic in 2020 have significantly changed the basic dynamics experienced in the electricity sector in the last 10 years and have affected long-term planning. Lastly, as of the last quarter of 2021, the increase in the demand of oil and natural gas due to the acceleration of economic growth in the world with the diminish of the effect of Covid-19, the uncertainty about when the conflicts between Ukraine and Russia will end, and the existing and possible sanctions including energy commodities of countries in the same period, has led to significant increases in the prices of energy commodities on a global scale and in our country and leads to a new energy supply crisis.
As a reflection of all these developments mentioned above, the negative trend of electricity prices in the Turkish electricity market continued until the end of 2021.
The Market Clearing Price (“MCP”) was 231 TRY/MWh in 2018 and TRY 260/MWh in 2019. The MCP realized in 2020 on average was TRY 278/MWh. As a reflection of the supply/demand conditions in Turkish electricity sector and the increases in the prices of energy commodities on a global scale, the electricity prices in Turkish electricity market started to show an upward trend since the last quarter of 2021. The MCP showed an increase of approximately 82% compared to the previous year and reached to TRY 506,41/MWh in 2021. The MCP which was at an average of TRY 2,505/MWh in 2022, continued its upward trend in the first quarter of 2023 and reached to an average of TRY 2,785/MWh. In the second quarter of 2023, the upward trend in prices reversed and prices fell below 2022 levels. With the effect of this decrease, average MCP in the first half of 2023 occurred as TRY 2,276/MWh. Based on realization degree of expectations regarding slowdown of economies on a local and global scale and reflection of this slowdown to energy commodity prices will also affect the electricity prices in Turkey for the upcoming period.
As a reflection of supply/demand conditions in the electricity sector, the low price levels observed in Turkish electricity sector in the recent period have tended to recover as of the second half of 2021. The MCP which was at an average of 278 TL/MWh in 2020, showed an increase of approximately 82% YoY and arised at an average of 506 TL/MWh in 2021. Along with the depreciation of the Turkish Lira, the significant price increases in energy commodities, which started to be felt on a global scale as of the second half of 2021, were effective in this increase. The levels of oil and coal prices, especially natural gas, have recently risen to record levels.
On the other hand, electricity prices denominated in foreign currency, which is one of the most important parameters in determination of timing and suitable conditions for the start of investment and utilization of project financing, were also closely followed by us. Thus, the MCP which was at an average of approximately 48 USD/MWh in 2018 realized as approximately 40 USD/MWh in 2020, decreasing by 17% YoY on USD basis. The MPC remained at an average of 55 USD/MWh in 2021. In this context, the MCP continued to remain below the level of 60-65 USD/MWh, which is estimated to be achieved in the medium term while purchasing Konya Ilgın.
The Energy Market Regulation Authority (“EMRA”) has rejected the application of Konya Ilgın which includes the amendment of the electricity generation license dated 27 February 2013 with a term of 49 years by extending the completion time of the thermal power plant by an additional 66 months and cancelled the electricity generation license with its decision taken on October 27, 2022.
Currently, our investment plan in the medium-term for the execution of Konya Ilgın Thermal Power Plant Project is still valid considering that the decision of the EMRA is not a final decision and is subject to judicial review. The use of the coal reserve in the relevant field as thermal power plant fuel to create economic value is considered by us as the most appropriate business model and we continue to work on implementation of the project despite the worldwide restrictions on the thermal power plant projects and all negative developments beyond the control of our Company.
Our Company does not directly carry out any mining activity in the bauxite field located at Islahiye district of Gaziantep for which our Company has the operating license numbered 78173 and CTC Enerji Madencilik Sanayi ve Ticaret A.Ş. (“CTC Enerji”) operates the bauxite field based on a royalty agreement with Park Elektrik. CTC Enerji pays the royalty fee of USD 3.20 per ton of ore produced from the bauxite field to our Company and the amount to be paid cannot be lower than the minimum amount of production commitment.
CTC Enerji continues its mining activity with open-pit method and the bauxite ore obtained is processed in the splitting-screening facility and offered for sale in different sizes. Main information about the bauxite field can be seen in the table below:
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Location |
Gaziantep / Islahiye |
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The Licence Group |
IV. Group (C) Operating License |
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The License Duration |
14.12.2018 – 14.12.2028 |
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Period of Royalty Contract |
Considering the market conditions, economic developments, and conditions of reserve and grade in the field, within the framework of CTC Enerji's request, the royalty agreement which expired on 15 April 2024, was extended until 14.12.2028 which is the expiry date of the license. |
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Minimum Production Commitment
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Minimum 200,000 tons of bauxite for the first royalty year, minimum 600,000 tons of bauxite for the second royalty year, and 1,000,000 tons of bauxite per year starting from the third royalty year until the end of the fifth year. |
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Amount of Estimated Reserve
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The quality of bauxite ore depends on the aluminium oxide (Al2O3) content of the core. As a result of the studies carried out by VAMI Company, headquartered in Russia, in 2005, the estimated total amount of bauxite reserve in the relevant field according to ore quality is given below. In the current market conditions, bauxite ore with Al2O3 content below 42%-43% levels has no direct economic value and needs to be enriched.
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The Energy Market Regulation Authority (“EMRA”) has rejected the application of Konya Ilgın which includes the amendment of the electricity generation license dated 27 February 2013 with a term of 49 years by extending the completion time of the thermal power plant by an additional 66 months and cancelled the electricity generation license with its decision taken on October 27, 2022.
In summary in the relevant decision of the EMRA;
- The reasons submitted to EMRA regarding not being able to start the power plant construction was not seen within the scope of, “Force majeure situations, and justifiable reasons not caused from the license holder” regulated at electricity market legislation,
- The electricity generation license dated 27.02.2023 and numbered EÜ/4292/02479 which was given to Konya Ilgın for the “Ilgın 500 MW Thermal Power Plant” was cancelled,
- Out of two letters of guarantee, which submitted to EMRA amounting to TRY 14,375,000 and TRY 1,000,000 for the aforementioned project, TRY 7,500,000 was recorded as revenue in accordance with the 45th article of the Electricity Market License Regulation (“Regulation”) and the remaining part is returned to Konya Ilgın,
- Pursuant to the third paragraph of Article 27 of the Regulation; all real persons and legal entities who directly or indirectly have a share in the capital of Konya Ilgın, and the members of the Board of Directors of Konya Ilgın were prohibited for a period of three years following the cancellation of the license
Although the reasons submitted in our application for the extension of the completion time of the power plant due to economic and sectoral developments beyond the control of our Company and its subsidiary has not been treated as “Force majeure situations, and justifiable reasons not caused from the license holder”, within framework of the electricity market legislation, by EMRA, since such an assessment is considered not to be reasonable and in compliance with the relevant legislation, our Company and subsidiary has started legal action against the decision.
About the administrative decision of the EMRA, on January 3, 2023, Konya Ilgın filed a lawsuit for the suspension of execution and cancellation of the related decision of EMRA before Ankara 21st Administrative Court with the file number 2023/11. Ankara 21st Administrative Court, with its decision dated March 8, 2023; decided to reject the request for suspension of execution. As a result of the objection made by Konya Ilgın against the court decision regarding the rejection of the request for suspension of execution, the 8th Administrative Case Division of the Ankara Regional Administrative Court decided to reject the objection request with its decision dated 13 April 2023. At the trial held on December 12,2023, the parties of lawsuit have been orally presented their statement and defences to the court. In the decision notified by the Ankara 21st Administrative Court on January 11, 2024, the court has decided to reject Konya Ilgın’s request for the cancellation of the EMRA’s decision dated 27.10.2022 and numbered 11321-10 subject to appeal on the grounds that the EMRA decision was not violation of legislation and law. The investigation on the merits of the case is going at the appeal stage.
Currently, our subsidiary Konya Ilgın carries out lignite mining activity in the field with license number 1247, which is located in Ilgın district of Konya. There is a royalty agreement between Konya Ilgın and General Directorate of Turkish Coal Enterprises Authority (“TCEA”) which is valid until April 9, 2032. The operating license of the field with license number 1247 has been taken from TCEA temporarily, limited with the royalty period. The royalty agreement is only for the evaluation of the mining reserves in the field and does not include the requirement to establish any power plant or similar facility. In this framework, the decision to cancel the electricity generation license taken by EMRA does not affect the ongoing mining activities of our Company and its subsidiary.
