Sudan gold rush flows to the Middle East

Nearly half of the gold output from the African state makes it way to Dubai or Beirut
Sudan gold rush flows to the Middle East
GOLD RUSH: Nearly half of the gold output from the African state makes it way to Dubai or Beirut (Bloomberg Images)
By Reuters
Thu 14 Apr 2011 04:05 PM

The Middle East, specifically Dubai and Beirut, has become a popular destination for Sudanese gold as output of the precious metal from the African country soars nearly twenty fold in two years.

Tens of thousands of small-scale Sudanese prospectors are undertaking hazardous expeditions across barren areas of Sudan to search for gold, drawn by tales of big finds and prices that have topped record highs this year above $1476 an ounce.

"Now we have the so-called gold fever because everybody is searching for gold, just like in 19th century America," Minerals Minister Abdelbagi Gailani told Reuters.

He estimates as many 200,000 small-scale prospectors are hunting in scattered areas in Sudan, forcing the government to consider incentives to stop them from selling the gold abroad and push for the creation of co-operatives to support them.

Over 50 percent of that gold is smuggled out through Sudan's porous borders for sale in Dubai or Beirut, Gailani said.

Co-operative groups have also been set up in some states to ensure that miners do not use child labour and make them aware of the health and environmental risks involved, he said.

"We have to keep an eye on them, we have to group them and we have to provide them some health services because they are using very toxic materials like mercury," he said.

Sudan has been known as a source of gold since the time of Egyptian Pharaohs and its own ancient Nubian kingdom, but small-scale prospecting has only boomed in recent years.

Khartoum, which for years focused on its oil reserves to generate revenues, is also stepping up efforts to develop the gold sector in a bid to diversify the economy and offset risk from the secession of its oil-producing south.

It has signed a string of mining deals -- as many as 128 Sudanese and foreign companies are now involved in Sudan's gold sector -- and this year set up a company that offers drilling, prospection and laboratory services, Gailani said.

Metals research consultancy GFMS says Sudan produced just four tonnes of gold in 2009, but Gailani estimates the country's output will touch 74 tonnes this year if the gold found by unregulated prospectors is included.

That would make the country the tenth-largest producer and Africa's third largest, behind South Africa and Ghana.

Gailani predicts the so-called "artisanal" gold seekers alone will mine more than 60 tonnes of gold this year in Sudan.

A London-based industry analyst, who declined to be named, said there had been a material increase in gold output recently from the area in and around Sudan, though it was unclear if production would be high as the government estimates.

Some of the gold linked to Sudan may also have been mined in neighbouring countries like Chad and the Central African Republic before being exported to the Middle East via Sudanese desert routes to the north, the analyst said.

"Sudan is a convenient export route," the analyst said.

For some, the booming gold sector is already too crowded. Businessman Tarig Khalil says he considered getting a concession for prospection and planned to use satellite images to pinpoint areas that held deposits, but later dropped the plan.

"There were just too many people involved already," he said. "We've now shifted our scope to anything but gold."

But for most, the prospect of becoming instant millionaires in a country where nearly half of the population lives below the poverty line, food prices are soaring and jobs are scarce, is enough incentive to risk big in the search for gold.

Tales abound of unprepared prospectors running out of water in the desert or being robbed, but they are often overlooked in favour of reports like one in the Al-Sahafah newspaper in December. That reported a man from Sudan's north-eastern Rashaida tribe found a 60 kg rock of high-quality gold, which he sold for a cool $1.6 million in Khartoum's gold market.

Tabidi says one of the more incredible sights he saw was of a rival prospector paying with gold for a brand new car brought to him in the desert with the help of GPS technology.

"People are so frustrated these days, there are fewer jobs, smaller salaries and life is so expensive," he said.

"And then they see all these people who have made so much money by searching for gold, so they want to go out themselves."

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