An assessment of mining efficiency in Turkish lignite industry Volkan Ş. Ediger a , Istemi Berk b,n , Mücella Ersoy c a Kadir Has University, Kadir Has Street, Cibali, 34083 Istanbul, Turkey b Institute of Energy Economics, University of Cologne, Vogelsanger Str. 321a, 50827 Cologne, Germany c Turkish Coal Enterprises (TKI), Hipodrom Cad. No. 12, Yenimahalle 06330, Ankara, Turkey article info Article history: Received 8 September 2014 Received in revised form 13 March 2015 Accepted 16 March 2015 JEL Classificiation: Q31 Q38 C38 C43 Keywords: Lignite Production Turkey Mining efficiency index abstract This article focuses on the mining activities of Turkish Coal Enterprises (TKI), the major lignite supplier in Turkey. First, we analyzed the lignite production and overburden removal activities of TKI from a historical perspective and then employed the Principle Component Analysis to build a mining efficiency index of TKI and investigated its historical development since the establishment of the company. We found that labor productivity and operational structure have been the most important factors, positively affecting the index. The current article makes two important contributions: (1) by using the most comprehensive data set available on TKI for the first time, and (2) by developing a Mining Efficiency Index (MEI), which can be used to analyze productivity in lignite mining activities in different countries. & 2015 Elsevier Ltd. All rights reserved. Introduction Coal has always been an important fuel in Turkish energy system. After the oil crises in the 1970s, rising concerns about energy supply security boosted the significance of coal as a domestic source in Turkey similar to other energy import-dependent countries. Its share in overall energy consumption increased from 24.7% in 1970 to 30.9% in 1986 and then fluctuated between a low of 26.5% (in 2001 and 2005) and a high of 33.7% (in 2012). Furthermore, the share of lignite in primary energy consump- tion (PEC) first increased progressively to 20.9% in 1986 and then declined to 10.2% in 2005, forming a major trough. Since then it has increased again, reaching a share of 14% in 2012. On the other hand, the share of hard coal in PEC increased steadily from 8.8% in 1978 to 16.7% in 2012. From 1977 until 2003, the share of lignite was larger than that of hard coal, yet from 2003 to 2012, Turkey consumed a total of 147.581 million tons-of-oil-equivalent (toe) of hard coal and 132.274 million toe of lignite. The increasing share of hard coal relative to that of lignite emphasizes the growing role of hard coal in the Turkish energy system. However, this generates an important threat to the energy supply security of the country because the hard coal supply is mostly import dependent and energy import dependency is a major problem in Turkey. In 2012, Turkey consumed 120.093 million toe primary energy of which only 25.8% (31.964 million toe) was produced domestically, 98.693 million toe was imported, and 6.866 million toe was exported, thus net import dependency on foreign energy sources was 74.2%. The hard coal import increased to 19.237 million toe, comprising 94.7% of the total hard coal consumption in 2012. On the other hand, lignite is the most abundant fossil fuel resource in Turkey and demand for it has always been met by domestic production (WEC-TNC, 1986, 1990, 1994, 1997, 2002, 2006; MENR, 2014). On the production side, since 1976, lignite has ranked first among other energy sources (Fig. 1). Since then it increased with minor fluctuations until its local peak in 1998. Between 1998 and 2004, it decreased by 28.5% from 12.792 million toe to 9.141 million toe and then increased again to 17.860 million toe in 2012. On the other hand, hard coal production has witnessed a contin- uous decrease. The same is true for oil production with the exception of the 1985–1991 period. Natural gas and asphaltite production has been minimal compared to other fossil fuels with maximum productions of 931 and 567 thousand toe, respectively. Historic lignite production and total primary energy production (PEP) are represented in Fig. 2. The two trends are parallel to each other with a correlation coefficient of 0.98. This means that PEP has mostly been driven by lignite production, whose share increased from 11.9% in 1970 to 55.0% in 2012. Therefore, lignite Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/resourpol Resources Policy http://dx.doi.org/10.1016/j.resourpol.2015.03.010 0301-4207/& 2015 Elsevier Ltd. All rights reserved. n Corresponding author. Tel.: þ49 221 277 29 315. E-mail address: Istemi.Berk@ewi.uni-koeln.de (I. Berk). Resources Policy 45 (2015) 44–51