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A golden new era for Sudanese mining

Article - June 2, 2015

With the loss of oil revenue, Sudan has prioritized the mining sector as its top foreign exchange earner, with lucrative gold investment and exports now expected to spearhead growth

Even though informal gold mining has long been an important element in the composition of the Sudanese economy, it is only since the secession of South Sudan in 2011 and the subsequent loss of oil that the Government has really begun to increase its focus on expanding the sector.

Covering such a big surface area which contains incredibly diversified geology and merges across the boundaries between seven countries, Sudan has always been known as having huge mineral potential, especially so in gold. However, until just recently – excluding the initial venture of the French/Sudanese company Aryab in the early 1990s – no serious attempts had ever been made at exploration and production.

This all began to change when in 2010 when the Government finally set up a designated department to manage Sudan’s mining resources. “The establishment of the Ministry of Minerals in 2010 marked a new era for the mining industry in Sudan,” explains the Minister of Minerals.

“The mining sector’s contribution to GDP has increased to more than 8 per cent, over 1 million jobs have been created, and it has helped to accelerate rural development because the gold reserves are located in remote areas.”

It was indeed thanks to the ministry’s formation, along with the full and proper implementation of the Mineral Wealth and Mining Development Act that ultimately gave the sector the management and direction that it had long awaited.

With this, the Ministry soon instigated and promoted a range of incentives to both local and foreign investors wishing to get involved with Sudan’s potentially money-spinning mining industry.

“The government has now signed agreements with 105 different companies.  These are both local and foreign investments, including companies from Kingdom of Saudi Arabia, Russia, Morocco, Republic of Turkey, Qatar, and China,” says the minister.

Following increased investment and increased production, Sudan opened its first gold refinery in 2012 with the aim of increasing the quality and trade-capacity of domestically mined gold as well as attracting gold from other neighboring countries to be refined in Sudan, giving the economy an additional and important boost.

In 2012, gold exports earned around US$2 billion,  accounting for more than 50% of total export revenues (as oil exports dropped), making it one of the country’s major export commodities and Sudan itself the third biggest producer on the continent behind South Africa and Ghana.

With even greater foreign investment expected from major mineral companies thanks to the ongoing Government promotion of the sector, some estimates predict a spike in Sudan’s gold exports over the next five years, with the aim of becoming Africa’s second largest producer in the next decade.

Furthermore, huge areas of the country have been designated for mineral exploration, including areas north of the capital Khartoum, and near the border with South Sudan, with rich deposits anticipated in most of it.

“Our plan this year is to produce 70 tonnes of gold both from traditional mining and using high technology. This is an indicator that we have so much potential and this is spreading throughout the 16 states of Sudan,” stresses the Minister of Minerals.

“We are also this year amending the law (Mineral Wealth and Mining Development Act) to accommodate new developments and encourage more investments in the fields of transfer of technology scientific research and institutional capacity building.”

The fields of technology, research and infrastructure are particularly crucial areas in which the government hopes to attract more investments, such as the recent one made by Kuwait, in order to help improve efficiency in the sector.

“We have already signed an agreement with the Kuwait Fund for US$70 million to establish labs,” the minister reveals.  “Sudanese specialists will be trained in these labs and it will reduce the time for exploration, adding income to the government.  Instead of sending samples to overseas, they can do it here locally.”

Aside to other recent actions put in motion for a National Plan of Environmental Preservation as well as the establishment of a police unit to secure the operations of mining companies from smugglers, safety measures to avoid the exposure of miners to poisonous mercury are also being put in place. Under the national strategy to eventually get rid of mercury in the mining process, the Government is introducing mercury-free machines for use by artisan miners.

Going forward, assuring the safety of the mining sector will no doubt be essential for its development.  Meanwhile, with much of the focus on the burgeoning industry so far heavily focused on gold, the Government is now looking at promoting mineral diversification.

“Apart from gold, we now have companies operating in iron exploration and copper,” says the minister.

With huge reserves of more than 41 different minerals in different parts of the Sudan, the Ministry of Minerals is inviting investors to explore possibilities of investment in alternative minerals, as well as the services related to the sector.