South Sudan to Offer Gold Permits in Bid to Wean Itself Off Oil

South Sudan, mired in conflict since December, plans to issue exploration licenses for gold-mining within three months as the nation seeks to reduce its dependency on oil revenue.

Companies will soon begin drilling for “substantial” deposits of the precious metal in the country’s Eastern Equatoria state, Arkangelo Okwang Oler, director general for mineral development at the Petroleum and Mining Ministry, said in a May 6 interview in the capital, Juba. Australia’s government plans to donate geological and administrative equipment to South Sudan if the ministry erects new headquarters, Oler said.

“In a period of three months we can have a building fully operational and we start giving licenses without any problems at all,” Oler said. When the infrastructure is ready and the equipment arrives “that’s the end of provisional licensing” for mineral-mining, he said.

South Sudan wants to diversify its economy from oil, an industry that provides almost all the government’s revenue and has been a key target for rebels opposed to President Salva Kiir. Violence erupted in the world’s newest nation on Dec. 15 when Kiir accused his former deputy Riek Machar of plotting a coup, a charge Machar denies. Violence has left thousands of people dead and forced more than a million to flee their homes, according to the United Nations.

Kiir signed into law a 2012 mining act allowing foreign companies to explore for minerals. That reversed a moratorium on licenses imposed in the run-up to South Sudan’s 2011 referendum on independence from neighboring Sudan.

Mineral Potential

Details on South Sudan’s mineral potential are scarce, the U.S. Institute of Peace said in a report last year. The country’s location, bordering mineral-rich parts of Uganda and the Democratic Republic of Congo, suggests it may have similar resources, at least in the south, it said.

New Kush Exploration & Mining Ltd., based in Johannesburg, and Jersey-based Equator Gold Ltd. are currently operating in the nation with provisional licenses, Oler said.

An international investors conference held in Juba in December, days before violence erupted, saw a “multiple of companies from abroad” show interest in the mining industry, according to Oler. Tax breaks and lengthy exploration contracts may lure companies from Australia and the U.K., he said.

“We’re actually hoping for a very big potential,” Oler said. “Records show that gold is prolific in every part of South Sudan.”

The government also plans to establish a security force to monitor the transit of gold in artisanal-mining areas. Trafficking of the metal across international borders means a “substantial” amount is lost, according to Oler.

Electricity shortages, poor infrastructure and a shortage of skilled labor also pose difficulties in developing the industry, Oler said.

To contact the reporter on this story: Mading Ngor in Juba at mngor@bloomberg.net

To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net Michael Gunn, Sarah McGregor

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