Gold in Action: World Gold Council Releases New Report on Turkey
A new report “Turkey: gold in action” from the World Gold Council, released today, explores the role gold plays in the daily life of the world’s fourth largest consumer of gold, as well as examining its contribution to supporting the national economy.
Turkey is a microcosm of the global gold market – a country which is home to the entire gold value chain from mining and refining, to jewelry design and investment. Its long tradition of gold demand, underpinned by a deep cultural heritage, strong fabrication capacity and a substantial coin market has resulted in households accumulating an estimated 3,500 tons (t) (US$145.3bn) of gold tucked “under-the-pillow”, a term used in Turkey to refer to physical gold stored by the general population.
Turkey: gold in action assesses the role that gold plays in consumers’ lives, examines the economic contribution of the entire supply chain and explores how the metal has been monetized to support the national economy. In 2012 alone, gold fabrication, consumption and recycling added at least US$3.8bn to Turkey’s economy. An innovative central bank policy introduced in 2011 incentivized commercial banks to create a range of gold-backed banking products to mobilize Turkey’s stock of gold. This improved the health of the banking sector by reducing costs and improving liquidity, as well as ensuring commercial banks boost their gold reserves. Policymakers have now successfully seen around 250t of gold (US$10.4bn) drawn into the financial system and put to work supporting Turkey’s economy.
Alistair Hewitt, Head of Market Intelligence at the World Gold Council said: “Amid a challenging global economic climate, Turkey faces ongoing political and social pressures to ensure that it steers a steady economic course. Gold represents many things in this society – from employment for over a quarter of a million people in the gold industry, to an investment protecting people’s wealth against the ravages of inflation and currency weakness. It is also a unique example to the rest of the world of how gold can successfully be put to work at the core of a nation’s financial architecture.”
Some of the key findings from the research include the following:
• Gold is deeply ingrained in Turkish culture. The use of gold coins as a medium of exchange was pioneered by merchants in Lydia – the precursor of modern Turkey - as far back as 700BC and continues to be one of the world’s largest official coin fabricators.
• Turkey’s long-standing desire for gold has resulted in households accumulating a large stock of gold tucked “under-the-pillow”. An estimated 3,500t of gold has been collected by households.
• Gold makes a significant contribution to Turkey’s economy. Gold fabrication, consumption and recycling added at least US$3.8bn to Turkey’s economy in 2012 alone.
• Gold is a small, but important cog in Turkey’s financial system. By the end of 2013, commercial banks held around 250t, equivalent to US$10.4bn, which had been put to work supporting Turkey’s economy. This includes 40t - about US$1.7bn - of Turkey’s “under-the-pillow” stock, which has been mobilized since mid-2012.
• With a well-developed post-production supply chain, Turkey has ambitions to become a regional refining and recycling hub. Turkey has a number of large-scale refiners which refine doré to internationally accepted LBMA standards as well as processing or recycling gold.
• Its gold mining industry is small, but growing quickly. Gold production has increased in almost every year since 2001, growing from 2t to 33.5t in 2013
British Lithium Pressured Due To Calls for Electric Cars
The British demand for lithium is set to reach 75,000 tonnes by 2035 as the government works towards their ban on the sale of high-polluting diesel and petrol vehicles within the UK. This comes as automakers worldwide continue to insist on the benefits electric vehicles will have on slowing the rate of climate change.
It is estimated that the UK will require 50,000-60,000 MT of lithium carbonate a year by 2035 for battery production to satisfy government needs. This is assuming production remains at 1.2 million vehicles per year, and the amount of lithium required does not increase.
British Lithium, which hopes to begin constructing a quarry to produce 20,000 MT of lithium carbonate a year in a $400 million investment, are not without competitors, both within the UK and abroad.
Competition For Lithium Rises In Europe
After only five years after its initial launch, Cornish Lithium is setting its sights on becoming a UK powerhouse in mining lithium, aiming to begin commercial production in under four years. Jeremy Wrathall, a former investment banker and current managing director of Cornish Lithium, had the future in mind when founding the company.
“In 2016, I started to think about the electric vehicle revolution and what that would mean for metal demand, and I started to think about lithium,” he said in an interview with AFP. “A friend of mine mentioned lithium being identified in Cornwall, and I just wondered if that was a sort of unrecognised thing in the UK.”
Lithium was first discovered in Cornwall around 1864 and has not been mined again since 1914 when it was produced as an ingredient in fireworks. Now, however, Cornish Lithium is reportedly in the testing stage to see if the metal can be produced commercially to meet the growing demand required for the electric car sector.
Despite Cornwall’s close historic ties to mining lithium, Wrathall insists that the project is purely commercial.
Cornish Mining Revival For Lithium Production
“It’s not a mission that drives me to the point of being emotional or romantic,” he says. “It’s vitally important that we do get this technology otherwise Europe has got no lithium supply.”
The European Commission has also stated their goal to end the sale of new petrol and diesel cars by 2035 to aid the environment. That being said, the majority of lithium extraction currently relies on power provided by environmentally damaging fossil fuels─a slight contradiction.
Alex Keynes, from the Brussels-based lobby group Transport & Environment, is adamant that mining for lithium should be done sustainably.
“Our view is that medium-to-long term, the majority of materials including lithium should come from efficient and clean recycling.
“Europe from a strategic point of view should be looking at securing its own supply of lithium.”
Despite growing competition from abroad, British Lithium Chairman, Roderick Smith, continues to place importance on the mining of lithium within the UK.
“Imagine what the UK economy would look like if we lost our automotive industry,” Smith says. “The stakes are high for the UK.”
Smith expects the UK to compete with other European countries to secure a lithium battery plant in the near future.