Wed, Nov 14, 2012 - Page 9 News List

Gold fever sweeping across once oil-dependent South Sudan

Investors are lining for permits and licenses to explore for gold and diamonds, although it will be several years before commercial mining produces anything

By Hereward Holland  /  Reuters, NANAKANAK, South Sudan

Taking a break from the toil of digging, Leer Likuam sat on the edge of a shallow trench, puffed his pipe and boasted he once found a 200g gold nugget bigger than his thumb.

In Nanakanak, a village of stick huts in an area that has attracted hundreds of diggers since Sudan’s civil war ended in 2005, Likuam’s find would have been lucrative, but unexceptional.

“Everything is luck,” he said through a translator.

On an average day he might dig up 6g, worth about 1,200 South Sudanese pounds (US$270), he said.

“Some days you’re lucky,” he added.

Word of Nanakanak’s riches has spread. In the capital, Juba, international mining firms are lining up at South Sudan’s ministry of petroleum and mining, aiming to get their hands on part of the vast, unexplored territory.

Officials say firms from China, Australia, the US, South Africa and other African countries plan to apply for licenses when new mining laws are passed later this month. After many delays, parliament was set to begin debate on the bill on Monday.

The South voted to secede from Sudan, then Africa’s sixth-largest exporter of oil, in a referendum last year.

The new nation inherited three-quarters of the united country’s oil production, but in January a row with Khartoum led it to shut down the industry whose receipts gave South Sudan 98 percent of its income.

The sudden loss of funds prompted Juba to introduce severe austerity measures, centralize and expand tax collection, and explore fresh sources of revenue to replace petrodollars.

Oil production is expected to restart in the next couple of weeks, reaching about 230,000 barrels per day by the end of the month, but in the meantime the government hopes to pass mining legislation that will formalize the industry, let them tax precious metal and mineral exports and sell concessions to large-scale investors.

“It will diversify the economy. The mining sector has great potential,” South Sudanese Petroleum and Mining Minister Stephen Dhieu Dau said.

On the international market, Likuam’s prize lump would fetch US$11,000, an enormous sum in a country where the average teacher earns just 360 South Sudanese pounds, about US$90, per month.

Likuam is not the only man with the golden touch.

Around him, dozens of other Toposa tribesmen and women, festooned with plastic necklaces, brass piercings and beaded amulets, hack away at the red soil with metal poles and shovels, digging small craters in a boozy revelry.

Despite the morning hour, girls distribute crates of lager, “sarko” moonshine and pitchers of bitter-smelling beer brewed from sorghum.

Many of the miners claim to have found nuggets of a rival size, or even larger.

Nobody knows the extent of South Sudan’s mineral reserves because the 22-year war prevented exploration.

The latest geological surveys date back to the 1970s and 1980s, but mining officials say diamond and gold deposits in South Sudan’s mineral-rich neighbors are encouraging. They describe the 16-month-old country as virgin territory.

“We are neighbors to the DR Congo [Democratic Republic of the Congo] and Central African Republic, so we can’t rule anything out. Geology doesn’t know borders,” said James Kundu, acting director-general for geological surveying at the ministry.

As well as gold and diamonds, he lists potential deposits of chromite, copper, uranium, manganese and a belt of iron ore, which is often associated with aluminum. A lot of records were lost in the war. One report by a Belgian company was half-eaten by termites, Kundu said.

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