Sudan eyes 7 tonnes gold in 2011, plans refinery

PORT SUDAN: Sudan said on Sunday it expects its mining industry to produce around 7 tonnes of gold in 2011 and it plans to launch a gold refinery next year to improve the quality of its much extensive larger small-entrepreneur output.

Sudan is trying to boost output of gold and other minerals to compensate for the loss of much of its oil production of 500,000 barrels a day when South Sudan became independent in July.

The African country is now fighting an economic crisis as oil used to be the dominant source of state revenues. Inflation is spiralling while a scarcity of dollars is making imports more expensive.

Sudan expects to produce 7 tonnes from regular gold mines this year, Minerals Minister Abdelbagi Gailani Ahmed told an industry conference in the Red Sea port of Port Sudan.

Sudan's biggest gold mine, a Sudanese-Canadian joint-venture, has said it will produce about 2.3 tonnes in 2011.

"We have handed out around 200 gold exploration licenses so far," Ahmed said.

The country's total gold output, including unofficial "artisanal" gold seekers attracted by a rush in the north of the vast country, would be between 66 and 70 tonnes, he said.

This is slightly below the previous target of 74 tonnes. Analysts say it is hard to verify the targets that come from unofficial production from thousands of gold seekers outside the regular mining industry.

To improve the quality of this "artisanal" output and encourage seekers to sell gold to the central bank rather then smuggling abroad, Sudan will launch a gold refinery, the minister said.

Annual production capacity would be 150 tonnes of gold and silver, he said, adding the refinery in the capital Khartoum would start working from early 2012.

Sudan also expects its chrome production to increase in 2011 beyond last year's 50,000 tonnes despite continued violence in the main production state of Blue Nile.

"We expect an increase. Production is going on despite the situation in Blue Nile," he said, declining to give a more precise forecast.

Last month, fighting broke out between the army and armed opposition groups in Blue Nile state bordering South Sudan.

Sudan also wants to launch joint research and other projects with neighbouring Eritrea, Ahmed said.

Copyright Reuters, 2011