GILS Mining: Turkmenistan
Mining
Turkmenistan
1. What is the nature and importance of the mining industry in your country? What are the target minerals? Which regions are most active?
In Turkmenistan, the mining industry is secondary to the dominant hydrocarbon sector. According to recent government estimates, the mining sector comprises approximately 5–10% of GDP. It supports several key sectors, including construction (through cement and gypsum), agriculture (via potash and fertilizers), and chemical manufacturing (such as sulfur and iodine). The industry is primarily state-controlled, with organizations like Turkmendovletgeologiya and Turkmenhimiya leading exploration and production. However, Turkmenistan has signaled a growing openness to attract private and foreign investment to boost development and modernization of the mining sector in Turkmenistan.
Turkmenistan’s mining efforts focus heavily on industrial and chemical minerals. Key industrial outputs include bentonite, potash, salt, and sulfur, while the chemical sector produces iodine, ammonia, and urea. Cement and gypsum production also support domestic infrastructure needs. In addition, the country has promising potential in critical minerals—particularly lithium from brine sources in Garabogazkol Bay, iron ore in Gyzylgaya-V, and rare earth elements such as neodymium and lanthanum in Lebap Province. Although these resources are still in exploratory or early development stages, they present a strategic opportunity for Turkmenistan to align with global green energy trends.
Geographically, mining activities are concentrated in several provinces. Lebap Province hosts major sulfur, potash, and salt operations, along with rare earth exploration. Balkan Province is central to iodine, bromine, gypsum, and bentonite extraction, and is also home to lithium-rich brines and large-scale fertilizer production. Ahal Province provides limestone and clay for cement. Recently, the western parts of Balkan region such as Garabogazkol Bay have been targeted for lithium exploration and gain relevance in international markets, especially for critical minerals.
2. What are the principal laws that regulate the mining industry? What are the principal regulatory bodies that administer those laws? Were there any major amendments in the past year?
The mining industry in Turkmenistan is regulated primarily by the Law on Subsoil (2014), which governs exploration, extraction, and licensing while affirming state ownership of all subsoil resources. Additional key legislation includes the Law on Environmental Protection (2014), which sets environmental standards and remediation obligations; the Law on Foreign Investments (1992, revised), requiring state approval for foreign participation; and the Hydrocarbon Resources Law (2008), which, while focused on mineral fuels, has indirect implications for the mining sector. The Tax Code establishes royalties and taxation for mining operations. Regulatory oversight is shared among the Ministry of Industry and Construction Production, Turkmendovletgeologiya (State Geology Corporation), and the Ministry of Environmental Protection, with strategic licensing decisions made by the Cabinet of Ministers. As of 2025, no formal amendments have been published. However, recent legal reforms reported in 2024 aimed at streamlining licensing to attract investment may have affected the mining sector, particularly in support of the government’s 2023–2028 focus on potash and sulfur processing.
3. What classification system does the mining industry use for reporting mineral resources and mineral reserves? (How does this system compare to generally recognised international systems such as the CIM Standards (Canada), the JORC Code (Australia) and the SAMREC Code (South Africa)?
Turkmenistan’s mining industry employs a Soviet-style classification system for reporting mineral reserves, using categories A, B, C1, and C2, which are based primarily on the level of geological certainty. The standard is administered by Turkmendovletgeologiya and serves mainly for state planning and inventory purposes. Unlike international standards, Turkmenistan’s system uses the term “balance reserves” and does not distinguish between mineral resources and reserves. As a result, foreign companies operating in Turkmenistan may be required to convert local geological data to internationally recognized standards for compliance and investment purposes.
4. To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?
Turkmenistan maintains full state ownership over all subsoil resources under the Law on Subsoil and Subsoil Use (2014), with licensing authority vested in the Ministry of Industry and Construction Production, and strategic projects requiring Cabinet of Ministers approval. While private parties—both domestic and foreign—may obtain exploration or extraction rights, these are typically structured through state agreements, often involving joint ventures with majority state ownership (e.g., 51% state participation). Licensees are granted rights to extract and sell minerals. As land in Turkmenistan is predominantly state-owned, mining rights require separate surface use permits, and instances of privately held mining areas are minimal. Surface rights do not automatically confer subsoil access. There is no distinct legal regime for third-party access; any such involvement requires negotiation with the state or current license holders and is subject to high-level governmental approval.
5. What information and data are publicly available to private parties that wish to engage in exploration and other mining activities?
Turkmendovletgeologiya holds all geological and mineral resource data, which is typically accessible only through official state channels or through confidential agreements within joint ventures. There is no centralized or publicly accessible geological database. Information released through state media or investment forums—such as the Turkmenistan Investment Forum—provides only broad summaries of resource potential (e.g., sulfur, gypsum, lithium). To obtain geological information, private parties must formally request access from the Ministry of Industry and Construction Production, often requiring high-level approvals and existing relationships with government entities.
6. What mining rights may private parties acquire? How are these acquired (eg, first come, first considered; first come, first served; discretionary or competitive bidding)? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence or more senior tenure? What are the requirements to convert to a mining licence?
Private parties in Turkmenistan may acquire three primary types of mining rights: reconnaissance permits (for preliminary geological assessments, though rarely issued), exploration licenses (for detailed geological surveys), and mining licenses (for extraction and processing). These rights are granted through a discretionary process managed by the Ministry of Industry and Construction Production, based on alignment with state priorities rather than competitive bidding or first-come procedures. Applicants must submit a project proposal, financial documentation, and may be required to form a joint venture with a state-owned entity, often with majority state ownership; final approval must be obtained from the Cabinet of Ministers. Rights holders are obligated to pay license fees and royalties (typically 5–15%), meet extraction or exploration targets, comply with environmental and labor legislation, and submit regular operational reports. While exploration license holders are granted preferential rights to obtain a mining license if a viable deposit is proven, conversion is not automatic and depends on submission of a feasibility study, environmental impact assessment (EIA), financial guarantees, and further state approval.
7. What is the regime for the renewal and transfer of mineral licences? (Describe the renewal and transfer rights with respect to exploration, reconnaissance, exploitation and mining licences and the level of government discretion. Is government consent required to transfer a licence or with respect to change of control of the licence holder or its parent? What notices, filings or approvals are required in relation to the transfer of mineral rights or mining businesses?)
Mining rights in Turkmenistan may be renewed upon application to the Ministry of Industry and Construction Production prior to license expiry. Renewal is contingent on demonstrating compliance with license terms, including progress on exploration or extraction, adherence to environmental standards, and fulfillment of reporting obligations. However, renewal is highly discretionary and may be denied if the government’s strategic priorities shift. Transfers of mining rights are similarly subject to ministerial approval, with applicants required to submit the prospective transferee’s technical and financial qualifications, along with transfer agreements and project documentation. Transfers—especially involving joint ventures with state-owned firms—are rare and often require Cabinet-level review if the license is considered strategic. Additionally, changes in control of a license-holding entity typically require prior notification and may trigger reassessment of the license terms.
8. What is the typical duration of mining rights? Is there a requirement to relinquish a portion of the mining rights to the government after a certain number of years? (Can mining rights be extended or renewed, and under which conditions? Can mining rights be revoked or cancelled anticipatively by the government, and on which grounds?)
Mining rights in Turkmenistan are granted for fixed terms, depending on the activity type: exploration licenses are typically valid for 2–5 years and may be extended upon demonstration of progress; mining licenses are issued for 10–20 years, depending on the deposit’s scale and strategic value; and reconnaissance permits are short-term, 1–2 years, and generally non-renewable. While there is no statutory requirement for partial relinquishment during exploration, the state may reclaim undeveloped areas if license conditions, such as extraction quotas, are not met. Extensions and renewals are subject to Ministry of Industry and Construction Production approval, requiring updated environmental impact assessments (EIAs) and renewed financial commitments. Revocation of licenses may occur for reasons including non-compliance with environmental or operational obligations, failure to meet development targets, or changes in national policy. The process is typically initiated by ministerial notice, with limited avenues for appeal due to centralized state control.
9. Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties (eg, is the ownership of mining rights by foreign parties restricted or prohibited in any fashion? is it necessary or desirable for a foreign party to have a domestic partner)?
Foreign entities may acquire exploration or mining licenses in Turkmenistan; however, participation is subject to strict regulatory conditions, often requiring the formation of joint ventures with state-owned enterprises, typically with majority state ownership (e.g., 51%). Strategic minerals such as potash remain primarily under the control of state firms like Turkmenhimiya, reflecting a clear policy preference for domestic or state-led development. Foreign applicants must obtain Cabinet-level approval and demonstrate tangible national benefits, such as technology transfer, infrastructure development, or local capacity building. Partnering with a domestic entity is generally essential for navigating the regulatory process and securing project approvals, with joint ventures representing the standard operating model for foreign investment in the sector.
10. What are the principal business structures used by private parties carrying on mining activities (eg, branches, corporations, partnerships, joint ventures and trusts)?
Private parties engaging in mining activities in Turkmenistan typically operate through joint ventures structured as Closed or Open Joint Stock Societies, with state-owned enterprises holding a controlling interest (51–70%). This model is particularly favored for foreign investors, aligning with the government’s policy of maintaining oversight of strategic resources. State enterprises, established by the Ministry of Industry and Construction Production, lead major mining projects and often serve as mandatory partners in joint ventures. For smaller-scale or non-strategic mineral operations, Economic Societies—analogous to limited liability companies—are commonly used by domestic firms. While foreign entities may establish branches, this structure is more common in the petroleum sector, but generally may not be preferred for mining activities due to regulatory complexity and limited operational flexibility. Joint ventures remain the primary and most viable structure for private sector participation in Turkmenistan’s mining industry.
11. What duties, royalties and taxes are payable by private parties carrying on mining activities? Are these revenue-based or profit-based?
Mining entities in Turkmenistan are subject to a combination of royalties, license fees, corporate taxes, and the subsurface use tax. Royalties range from 5% to 15% of the gross value of extracted minerals, determined by license terms and mineral type. License fees may be charged annually or as a fixed amount under contractual terms. Corporate income tax is 8% for resident companies and 20% for foreign branches, with a 15% VAT on goods and services (export exemptions may apply) and a 15% withholding tax on dividends (reducible via treaties).
In addition, mining entities must pay the subsurface use tax, applicable to legal entities and entrepreneurs extracting natural resources or using land/subsoil waters for chemical production. This tax does not apply to contractors/subcontractors under the Hydrocarbon Resources Law. Rates for hydrocarbon extraction are 22% for gas and 10% for crude oil, while rates for other minerals vary between 0% and 50%, depending on profitability.
12. What is the environmental review and permitting process for a mining project? How long does it normally take to obtain the necessary permits?
Mining projects in Turkmenistan must undergo an environmental review led by the Ministry of Environmental Protection. The process starts with the submission of an Environmental Impact Assessment (EIA) that outlines projected impacts and mitigation measures. Upon EIA approval—typically within 3 to 6 months—the applicant may proceed to secure exploration or mining permits from the Ministry of Industry and Construction Production, with final approvals contingent on EIA compliance. The entire permitting process may take 6 to 12 months.
13. What is the closure and remediation process for a mining project? What performance bonds, guarantees and other financial assurances are required?
Mining operators in Turkmenistan are required to submit a Closure Plan to the Ministry of Environmental Protection, detailing site reclamation measures such as soil restoration and environmental stabilization. Under the Law on Environmental Protection, licensees must remediate mining sites to a condition comparable to their pre-mining state. Compliance is verified through state inspections. To ensure fulfillment of closure obligations, operators must provide financial assurances, including performance bonds equal to 5–10% of the project cost. Foreign entities may also be required to furnish bank guarantees or escrow deposits, reinforcing the state’s emphasis on post-mining accountability.
14. What were the biggest mining news events over the past year in your jurisdiction and what were the implications? What are the current trends and developments in your jurisdiction's mining industry (legislation, major cases, significant transactions)?
Recently, lithium development emerged as Turkmenistan’s most significant mining news. In March 2025, Business Turkmenistan highlighted the country’s potential to become a leading global lithium exporter, based on high lithium concentrations in Garabogazkol Bay. This coincides with surging global demand for lithium for electric car batteries. International interest intensified when Turkmenistan joined the C5+1 Critical Minerals Dialogue in February 2024, a U.S.-led initiative aimed at diversifying global supply chains for lithium, rare earths, and iron ore.
Authors: Mekan Bashimov, Kerim Balkanov
