Reuters Khartoum

Sudan expected to produce about 50 tons of gold this year, earning $2.5 billion (R22.2bn), its mining minister said yesterday, as the country sought to offset the loss of most of its oil reserves when South Sudan became independent last year.

Sudan is boosting production of gold and other minerals to gain new sources of state income and foreign currency to fund imports. Output of 50 tons could make it Africa’s third-largest gold producer behind South Africa and Ghana.

Mining Minister Kamal Abdellatif also said production at a joint project with Saudi Arabia to tap gold, silver and copper reserves in the Red Sea between the two countries would probably start in 2014.

Inside Sudan, the government had already licensed more than 85 companies to explore for gold in more than 120 locations, Abdellatif told an Arab mining conference in Khartoum yesterday.

Seven firms had reached the production stage so far and the number would double by the end of the year, he added.

“Till yesterday we reached 41 tons of gold,” Abdellatif said on the conference sidelines. He said that next year, gold production would be similar to this year’s projected level of about 50 tons.

Last year, Sudan earned about $1.5bn from 33.7 tons.

Oil used to be the main source for the budget, bringing in about $5bn a year, until South Sudan gained independence in July 2011, taking with it three quarters of oil output.

Unlike oil, most of the known gold reserves at the time of the country’s division were in the north and, while there are gold deposits in the south, there is little data.

Sudan’s gold output is small compared with players such as South Africa as Western firms long neglected the country due to sanctions and because deposits tend to be in remote areas.

But with high gold prices more companies are coming. Egyptian tycoon Naguib Sawiris this year bought Canada’s La Mancha Resources, which together with the government runs Sudan’s biggest gold mine, Ariab Mining.

It is currently investing to tap deeper deposits after reserves closer to the surface have been exhausted, which explains why Sudan expects output only to stay flat next year.

Sudan would also produce about 50 000 tons of chrome this year, Abdellatif said.

On the Red Sea project with Saudi Arabia, now in the exploration stage, he said initial output up to four tons of gold a year was possible.

Saudi Arabian Petroleum and Mining Minister Ali al-Naimi confirmed the cooperation. “It has already started,” he said, declining to give forecasts.