Haffiya Abdalla
The mining industry of Sudan was mostly driven by the extraction fuel minerals, with petroleum accounting for a substantial contribution to the country’s economy til the autonomous region of Southern Sudan became an independent country in July 2011.
Gold, iron ore, and base metals are mined in the Hassai Gold Mine.
Chromite, another important mineral, is extracted from the Ingessana Hills.
Other minerals extracted are gypsum, salt, and cement. Phosphate is found in Mount Kuoun and Mount Lauro in eastern Nuba. Reserves of zinc, lead, aluminium, cobalt, nickel in the form of block sulfides, and uranium have been established and so have large reserves of iron ore.
Gold is found in three types of geological formations: the Parentheses-Gossan formation in the Eriab region of the eastern Nuba Mountains; in quartz-vein formations in the North Kurdufan, Obaidiya, and the Blue Nile region; and alluvial gold along the Nile River and its tributaries, particularly in the Blue Nile and Northern Sudan.
The Sudan Gold Refinery Company, with full ownership rights vested with the Central Bank of Sudan, the Ministry of Minerals, and the Ministry of Finance and Natural Economy, produces gold in the range of 270 to 360 tons; silver alloy and silver granules are also byproducts.
Gold, iron ore and base metals are mined in the Hassai Gold Mine, located 50 kilometres (31 mi) to the northeast of Khartoum. This is the only gold mine in the country with a production capacity of 90,000 oz/year.
Hopes to Double
In September 2012, the government opened the country’s first gold refinery and it is speculated to be one of the largest of such constructions in Africa. The refinery will produce more than 328 tonnes of gold annually. Economic analysts say that the refinery is part of government’s strategy to make up for lost oil revenue after the South Sudan split of 2011.
The refinery will also be able to process silver and its opening should reduce the amount of gold and silver smuggled to other markets.
According to Reuters, Sudan hopes to double its gold revenues this year to $3 billion. In August 2012, the finance ministry of Sudan said that the export of gold ore from Sudan would be prohibited once the refinery was opened.
Control of Production
Sudan produced an estimated 93 tons of gold in 2018, Energy and Mining Minister Adil Ibrahim told Reuters in November, which would make it Africa’s third biggest producer after South Africa and Ghana, according to the U.S. Geological Survey.
The total gold production of Sudan in 2020 reached 36.6 tons, which is 9.6 tons more than in 2019, the Director of the Sudanese Company for Mineral Resources reported in a press statement.
The Director of the Sudanese Company for Mineral Resources acknowledged national and international gold smuggling operations “through the main windows”, calling for the establishment of special prosecution teams and tightening control on production.
In a separate statement, the Sudanese Company for Mineral Resources announced the establishment of an industrial zone in Um Rawaba in North Kordofan to benefit from the large mining residues from North and South Kordofan.
A gold plant will be set up south of Um Rawaba for gold processing, “which will support development in the two states as well as the national economy”.
The Governor of North Kordofan pledged to harness all the required capabilities that necessitate the establishment of this project, indicating the importance of the project in a way that is beneficial and positively reflected in the interest of serving the people.
Traditional gold mining is carried out by excavating the soil that contains gold. The soil is then milled and treated with mercury, which extracts about 30 per cent of the gold in the rocks. The leftover soil is treated with cyanide to extract the remaining gold.
This process results in highly toxic industrial waste. Traditional miners, small companies and gold labs dispose of these wastes by pouring them directly into valleys and streams, leading to heavy pollution in the environments surrounding the mining areas. This has long term health consequences.
Protests against traditional gold mining have increased in recent years in several states in the country, especially South Kordofan, North Kordofan, North Darfur and Northern State.
Sudan is reportedly the second-largest producer of gold in Africa and the ninth in the world. The production however is driven by unregulated, artisanal (individual subsistence) mining.
Gold producers have taken steps to open up the trade in the precious metal further to private investors, allowing them to handle all exports and taking the business out of state’s hands.
A circular approved bars government bodies from exporting gold and opens the trade to private firms provided they meet requirements, such as paying taxes and royalties.
Sudan has been trying to crack down on gold smuggling and generate more foreign currency. For years, the central bank had a monopoly on exports, buying gold locally at fixed prices at collection sites nationwide, which led to the illegal trade according to Sudan News Agency (SUNA).
Sudan produced an estimated 93 tons of gold in 2018, said the Minister of Energy and Mining, a level that would make it Africa’s third biggest producer after South Africa and Ghana according to the US Geological Survey.
Regulations approved in January opened gold exports to private companies but limited private mining firms to exporting 70% of their output with the rest to be sold to the central bank.
The exporters were also required to sell all foreign exchange export proceeds to the central bank at the official exchange rate, which was at that time about 45 Sudanese pounds to the dollar, equivalent to about half the black market rate.
The official rate has since weakened to 55 pounds to the dollar, while the black market rate has fallen further to 146 pounds.
The new rules bar the central bank from buying gold entirely except to increase official reserves, in which case it must be bought from the local market.
Traders would now be able to export gold through Khartoum International Airport and the government would crack down on other routes used for smuggling, SUNA reported.
The new rules were agreed upon by an economic committee meeting headed by Sudan’s top military commander, Mohamed Hamdan Dagalo, and Prime Minister Abdalla Hamadok.
Unrealistic
It is worth nothing that Sudan has begun allowing private traders to export gold, a measure designed to crack down on smuggling and attract foreign currency into the country’s cash-strapped treasury.
Sudan’s central bank has been the sole body legally allowed to buy and export gold and set up centers to buy the metal from small-scale miners.
Acting central bank governor Badr al-Din Abdel Rahim Ibrahim said on Jan. 1 that the bank would end its gold purchases entirely. A little-known private company founded in 2015, al-Fakher, became the first to take advantage of the new regulations, exporting an initial 155 kg.
In new regulations circulated on Jan. 1, the central bank said private mining companies could now export up to 70% of their production provided they deposited proceeds in local banks. They had to sell the other 30% to the central bank.
The companies would also have to sell any foreign currency they earned, unless used for their mining business, directly to the central bank at the official exchange rate, now 45 Sudanese pounds to the dollar. The black market rate is 88 pounds to the dollar.
Gold traders in Sudan welcomed the central bank’s move to open up exports but said the government-set exchange rate and the requirement to turn production over to the bank makes the trade unattractive.
“We traders ask to be allowed to export the entire quantity of gold and refuse to give 30% to the Central Bank of Sudan,” said Mohamed Tabidi, a prominent jeweler and one of Khartoum’s main gold dealers.
“We ask that the central bank deals with us according to the market price and via direct negotiations.” The official exchange rate was unrealistic, he said.
According to Sudan News Agency, before the new regulations, the central bank bought gold at a discount to the international price. As a result, an estimated 70-80% of it was smuggled abroad, according to government officials.
The smuggling has deeply hurt the government, which lost its main source of foreign exchange when South Sudan seceded from Sudan in 2011, taking most of the country’s oil with it.
Gold production in the North began soaring just as oil income fell off, but because so much was smuggled abroad, the state was deprived of foreign exchange.
The central bank has been printing Sudanese pounds equivalent to $200 million a month to buy and export gold to finance subsidized commodities, mainly fuel and wheat, the finance ministry said in a 2020 budget statement .
