INDUSTRY

MINING
Albanian Investment Development Agency Agjencia Shqiptare e Zhvillimit t Investimeve

MINING
Quick Facts
Position: Borders: Southwest of the Balkan Peninsula Greece, Macedonia, Kosovo, Montenegro, Italy 28,747 sq. km 2.9 million $12.07 billion (2011) - $12.04 billion (2012) 3.1% (2011) - 1.6% (2012) $1 billion (2011)- $1 billion (2012) Parliamentary Republic NATO, WTO, Associated to EU (expecting candidacy)

INDUSTRY

Country land area: Population: GDP:

GDP growth: FDI inflow: Government:

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MINING INDUSTRY

Membership:

in Albania:

Why invest

Favorable geo-strategic location. Friendly investment environment and very high level of investment protection. The lowest tax rates in Europe: 10 percent flat tax on personal income and corporate profits. Cost competitive workforce Young population A number of fiscal incentives and facilities, including granting of public land. One stop-shop for company registration and business licensing. Very competitive cost environment. Free trade with the EU and the neighboring countries. Low inflation stable economy.

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MINING INDUSTRY

Rich in various minerals Oil and Gas Old tradition in mining industry A huge untapped potential for further investment, both in extracting and processing A top priority sector for Government and supportive policies Liberalized market and trade policies High-quality and experienced engineering and technical workforce Cheap labor Easy access to international markets Priority given to international investors Proven record of successful foreign investment in the sector

Why invest in the mining industry in Albania:

Introduction
With its rich mining history, considerable mineral reserves, untapped potential, and favorable investment environment, Albania is emerging as a regional and European leader in mineral production. Mining industry has traditionally been the backbone of the Albanian economy. From 1970s to 1990, Albania was a powerhouse of chromite production and an important exporter of copper, iron-nickel, bitumen, etc and their processed byproducts. Large industrial complexes operated across an integrated value-chain from mining through metallurgical processing to downstream metals fabrication. Following the fall of communism and the state planned economy, the mining industry collapsed and disintegrated and production fell to minimal levels. Due to difficult economic transition, restructuring and investments in the sector were delayed for almost two decades. It was only in the mid-2000s that the first major reforms in the mining industry were undertaken and a modern mining sector began to shape up in the country. This coincided also with favorable prices of main metals. As a result, Albania is again placing itself on the map of world minerals output. An ambitious national strategy has placed mining, together with energy, at the top of countrys development objectives. Government policies in the sector have aimed to transform the mining sector into a core industry able to fuel sustainable economic development. To this end the Government has privatized the mining and processing operations; has liberalized mining policies; has established a modern legal and regulatory framework; and has created a favorable business and investment environment in order to attract international investments that would bring the sector to its full economic potential. In addition, Government has made significant progress in harmonizing Albanian mining legislation with that of the European Union and in introduction of the established international standards in the mining sector. The environment protection has been part of this legislation as well.

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(Metric tons unless otherwise specified) COMMODITY Metals Chromite (18% to 42% Cr2O3) Copper Iron-nickel and nickel-silicate ores Ferroalloys, ferrochromium Steel Industrial minerals Cement Clay, kaolin Gypsum Limestone (cubic meters) 1,300,000 968,000 80,000 3,800,000 328,322 305,000 350,000 28,000 656,000 OUTPUT

Current situation
Recent investments in the sector have focused on prospecting, exploration and mining (both through rehabilitation of existing mines and development of new ones), as well as rehabilitation and development of the processing infrastructure.

Albania has today an active domestic prospecting-exploration sector. Modern, Salt 25,000 large scale exploration, including airborne Silica sands (cubic meters) 12,000 geophysics, is taking place in many areas of Mineral fuels and related the country for both metallic and industrial Coal, lignite 3,500 minerals. There are currently more than 800 Gas, natural, gross production (cubic meters) 17,400,000 outstanding prospecting, exploration, and Bitumen and tar sands 34,600 mining licenses, of which 680 for mining. More Fuels 744,000 than a third of the permits are for limestone, about a third for chromite and the rest for iron-nickel, copper, gold and rare earth minerals, bauxite, quartz, gypsum alabaster, clay, sandstone and other minerals. Most of the active companies in the metallic sector are in the in the prospecting and exploration stage, while a number of them have moved to mining and processing operations. At the same time, a considerable part of the old mining infrastructure has been concessioned to foreign investors, including major chromite, copper, bitumium, and nickel mines. A number of processing plants that could be rehabilitated or upgraded, have also been privatized or provided as concessions to foreign investors. The major operators in the sector are foreign investors, mainly from Canada, Turkey, Australia, Austria, UK, China, and U.S.A major contribution of these investors has been the employment of modern international approaches and technologies to exploration and professional development. At present, mining is the fastest growing sector in the country. Number of investments, output, employment, and downstream processing capacities are increasing rapidly. Mined production has been increasing at a rate of roughly 10 percent annually for the past 5 years. During this

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period, investments in the sector (FDI included) have increased five times. While industry accounted for more than 50 percent of countrys foreign direct investments in the past two years, mining and mineral processing received the major share of these investments. The major minerals currently produced in Albania are: chromite; copper; iron-nickel and nickel-silicate; bitumen and tar sand; limestone; silica sand; clays and gypsum.

Investment potential/ Resources and opportunities

Albania is a country rich in mineral resources and with a great deal of possibilities for both exploration and profitable exploitation. Albania has important reserves of chromium, and extensive reserves of copper, zinc, iron - nickel, titanomagnetite, coal, bauxite, magnesite, phosphorite, marine placer (magnetitetitanomagnetite, chromite, garnet, zircon, rutile, zircon, barite), bitumen, decorative stones, construction/cement stones (limestone, dolomite, basalts) as well Oil and Gas. It has also smaller reserves of uranium, gold, platinum and silver. Most of these reserves are in mountainous areas, particularly north, northeast and southeast of the country. In particular, the resource potential for select metallic deposit types of chromite, copper and nickel is high and offers growth potential, favoring modern exploration for new discoveries by good practice investors.

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Chromium
Albania has large chromite reserves currently estimated at about 36.9 million tones, of which about 12.8 million tons with 30-42% Cr2O3. Until 1990, Albania was the third largest producer and second largest exporter of chromites in the world, producing up to 1.5 million tons annually. Although its chromite production has started to recover only recently and current production is less than the 1990 level, Albania still ranks among main world producers of chromite. The exploration potential for chromite is high for small to medium size deposits, using modern exploration technologies searching for deeper deposits in prospective areas. Three new major perspective areas for prospecting and exploration have been already identified and will be granted as concessions to private investors in the next couple of years. In addition, there are opportunities for extensions to known larger ore bodies which require investing in exploration. A number of existing mines are also being prepared for privatization. In addition, a number of existing companies active in exploration will be looking for strategic partnerships to develop new mines. Opportunities exist in the area of chromite processing, as well. Currently there is only one smelting facility in the country with a capacity of less than 50,000 tons of ferrochrome per year. Albanias copper reserves are currently estimated at about 37 million tons at 1.42% Cu. In northern Mirdita zone the copper deposits are also associated by zinc and minor amounts of silver and gold. New exploration ongoing projects have outlined interesting values of gold and silver inside and close to coper/zinc ore bodies. However, a more accurate estimation of the ultimate reserve potentials and associated elements will be informed by ongoing and future exploration efforts.

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Copper
Copper subsector is underdeveloped and it offers important investment opportunities. The exploration potential for copper is considered very high, in particular for small to medium deposits. Several important perspective exploration areas are already identified. There is also a high potential for large copper mining operations. Investments in mineral processing and smelting are a high priority as currently there is only one beneficiation plant in operation in the country.

Nickel reserves are currently estimated at about 322 million tons, of which iron-nickel 220 million tons and nickel-silicate 102 million tons. The ultimate reserve potential is unknown, but is believed to be comparable to Turkeys. Overall, the nickel sector remains under-developed and a source of investment opportunity. The exploration potential is considered high for medium-sized deposits that can be economically significant and represent viable targets for junior and medium-sized international companies. Metallurgical industry of nickel is undeveloped and requires investment. The actual extracted mineral is periodically exported to metallurgical plants of Kosovo and Macedonia.

Nikel

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MINING INDUSTRY

Albanian government has placed a high priority in attracting foreign investments in the mining sector. The entire legal and regulatory framework has been designed to cater to this purpose. For this reason, Albania offer liberal procedures and favorable conditions for production and trading of minerals.

Investment environment

Mining laws apply equally to foreign and domestic investors.

The law grants up to 100 percent foreign ownership of mineral concessions. Unrestricted repatriation of profits and capital is guaranteed. Any foreign investor applying for obtaining mining rights might establish a local company (a limited liability company or a joint-stock company) or branches. Albanian or foreign legal entities may acquire the right to research, explore, exploit or perform activities that consist of the combination of all indicated activities There are no provisions imposing quotas, restrictions or limitations related to the processing, export or sale of minerals. Income deriving from the export or sale of minerals is not subject to any restriction or limitation. In addition to the corporate tax (at 10 percent), there is a very low royalty tax of 2 percent and 10 percent (negotiated on a case by case basis). The law provides for Vat exempt on the import of machineries and equipment used for the implementation of investment contracts with a value equal or higher than 50 million ALL and on the import of machineries and equipment used inthe inward processing industry, regardless of the investment value. All other machinery and equipment not falling into the VAT exemption and imported by taxable persons will continue to benefit from the existing VAT deferral scheme for a period up to 12 months from the moment of importation. The VAT may be deferred for a term beyond the 12 months period upon decision of the Minister of Finance when certain requirements are met. The law allows the stipulation of incentive agreements if the mining activity consists of the exploitation of minerals of the group of metallic and non-metallic minerals Exploration and exploitation (extraction) permits are granted to persons or companies that have the requisite financial and technical resources and mining experience to explore for specified minerals in the license area. The licenses are issued on an exclusive basis. More than one permit or license may be hold. The holder of a research exploration permit has a preferential right to obtain an exploitation permit. The Republic of Albania has ratified the Convention on the Recognition and Enforcement of Foreign Arbitration Awards (New York 1958) and consequently foreign arbitration awards are enforceable in Albania.

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