The war in Sudan has dealt a devastating blow to the gold production sector, which had been a cornerstone of the country’s revenue generation in hard currency. As a result, Sudan, once reliant on gold as a primary source of foreign exchange, is grappling with a severe decline in gold exports, further exacerbated by ongoing conflict. This dire situation is now causing a ripple effect on the nation’s economy, with substantial consequences for its foreign exchange earnings. Over the past five months, gold production plummeted to just two tons, a stark contrast to the previous year’s output, which exceeded 18 tons.
Miqdam Khalil Ibrahim, Assistant Director of the Sudanese Mineral Resources Company, revealed that corporate sector gold production had reached a mere two tons between mid-April and the end of August. The value of this gold production amounted to approximately $124 million, with the government’s share standing at $25.5 million.
A Vital Revenue Source Threatened by Challenges
Sudan has historically relied heavily on gold exports to bolster its foreign exchange reserves, with exports reaching approximately $2 billion last year. However, the gold sector faces a multitude of issues, including smuggling and shortages of essential materials such as mercury and cyanide needed for gold extraction.
Muhammad Al-Sawakni, Sheikh of goldsmiths and head of the Gold Division in Port Sudan, lamented the dire state of gold manufacturing, attributing it to the impact of the ongoing wars. He noted a significant reduction in the quantity of gold available for export.
In 2022, Sudan’s total gold production amounted to around 41.8 tons, contributing to 44 percent of the country’s total revenues, which reached $3.6 billion, according to the Ministry of Minerals.
2 million actively mine in diverse locations and markets
The Red Sea State leads in gold exploration with 51 squares for research, followed by the Nile River State with 23 squares, the Northern State with 17 squares, and South Kordofan State with 12 squares. Over two million individuals are actively involved in mining across valleys, mountains, deserts, and more than 80 traditional markets near mining centers.
Available statistics indicate the presence of approximately 5,000 screens, 161 pits, 11,241 production lines, drilling and exploration wells, and 3,000 devices for detecting surface gold. Furthermore, there are about 10,000 mills engaged in grinding stone, primarily in the traditional mining sector, which contributes to over 85 percent of Sudan’s annual gold production.
Efforts are underway to rejuvenate gold exports, with plans to launch a new gold export window in the administrative capital of Port Sudan. Muhammad Al-Sawakni, a member of the Government Committee for Gold, expressed optimism about this initiative and stated, “The problems now present are the lack of exports except with regard to distinguished companies, but we are now in the process of opening a window with the Bank of Sudan. God willing, in the coming days we will open the window and we will export gold from here.”
Sudan aimed to make gold its top foreign exchange source after losing oil revenue
Prior to the outbreak of war, Sudan had been striving to make gold its primary source of foreign exchange, seeking to compensate for the loss of three-quarters of its oil revenues following South Sudan’s secession in 2011. The mining sector also represented 40 percent of Sudan’s total exports.
The repercussions of this dwindling gold source are anticipated to have a severe negative impact on an economy already suffering due to the ongoing conflict, which has lasted nearly five months.
Dr. Adam Sulieman, an economist, highlights the critical connection between Sudan’s gold exports and its foreign exchange earnings, emphasizing the urgent need to address this issue.
Despite the presence of the Sudanese Mineral Resources Company as a government technical arm to monitor gold production, private mining, accounting for approximately 75 percent of gold production, continues to be a challenge due to rampant smuggling.
According to reports from international organizations, the Sudanese economy has contracted by as much as 42 percent due to the ongoing clashes between the Sudanese army and the Rapid Support Forces since mid-April. The situation demands immediate attention and concerted efforts to stabilize the gold sector and, by extension, Sudan’s economy as a whole.