In 2022, gold exports, valued at more than $2bn (Sd$1.17trn), accounted for more than half of Sudan’s total exports. According to the World Gold Council, this placed Sudan as the world’s 16th-largest gold producer and the fourth-largest on the African continent for that year.

Gold has become increasingly important to Sudan’s economy since South Sudan gained independence in 2011. According to the Rift Valley Institute, the 75% reduction in Sudan's oil exports following South Sudan’s secession led to the gold industry becoming an important source of foreign exchange, prompting non-traditional Sudanese companies to invest heavily in the industry.

The primary destinations for Sudanese gold exports are the United Arab Emirates (UAE) with $2.29bn in 2022, Italy ($18.7m), Egypt ($15.2m), and Turkey ($2.2m), according to the Observatory of Economic Complexity.

Officially, Sudan’s gold production has fluctuated over the years, from a low point of 50kg in 1991 to a peak of 107.3 tonnes (t) in 2017. In December 2022, gold production was reported at 41.8t, a decline from 49.7t the previous year.

However, the true value of gold leaving the country is estimated to be two to three-times higher than these official records. An estimated “50–80% of the gold is smuggled abroad… mainly through the UAE, which is the key area for refining gold within the broader region,” explains Ahmed Soliman, senior research fellow, Africa Programme, at Chatham House in a podcast recorded earlier this year.

The war between the Sudanese army and Rapid Support Forces (RSF) has been ongoing since mid-April of last year. Although gold exports have reportedly continued unaffected, the conflict and other geopolitical tensions have significantly influenced the gold industry in Sudan, shaping production, exports and the role of various stakeholders.

Mining policies and environmental concerns

Like many African mining areas, the Government of Sudan holds all mineral resources as the custodian. As a result, it possesses the sole authority to search for, survey, extract and manage Sudan's mineral wealth.

Sudan’s current mining policy provides increased incentives to the private sector, particularly in gold mining. However, the country has faced economic sanctions for some time and has struggled to attract foreign investors.

US sanctions, which had hindered businesses from investing in Sudan for two decades, were lifted by the end of 2017. Nevertheless, other obstacles, including geopolitical tensions, the legislative environment, and economic factors, remained a challenge. The current conflict has led to further international sanctions.

The Sudanese mining sector operates under two Acts of Parliament: the Mineral Wealth and Mining Development Act of 2015 and the Mineral Resources and Mining Development Act of 2007.

The two Acts do not include an adequate environmental law or regulation that effectively oversees issues concerning the environment, restoration, mine closure, mine-impacted communities or mine occupational health and safety, as per the African Mining Legislation Atlas.

In a recent paper exploring the effects of artisan mining on soil degradation and contamination in eastern Sudan, Ahmed et al. recommend that “strong measures” should be undertaken to protect the environment and humans from exposure to pollution by enforcing environmental laws.

“Despite the rising importance of gold mining in the national economy, the gold industry in general seems improperly managed,” they write. The authors also note that artisan mining takes place on geographically extensive territories in Sudan and that government bodies often have “insufficient resources to monitor the mining activities” alongside a “poor governance system for managing national resources in general”.

Given the emerging trends in the international mining sector, the Sudanese Government must create and enforce a thorough environmental, social and governance framework to attract investment.

Artisanal gold mining, smuggling and conflict in Sudan

Artisanal mining is a key component of Sudan's gold industry, with small-scale miners operating in challenging environments.

“Eighty to 85% of [Sudan’s] gold is produced through artisanal mining, using traditional methods, tools, limited machinery and environmentally hazardous [processes], making it hugely difficult to regulate,” according to Soliman.

Sudan has experienced a surge in protests against gold mining, driven by concerns over the hazards associated with the unregulated use of substances like mercury and cyanide used in gold extraction.

A report released in 2022 shed light on the widespread exposure of millions of individuals to life-threatening risks due to the use of hazardous chemicals in mining operations, Radio Dabanga reported.

The study by Ahmed et al, which examined two mine sites and a tailings site in the north-western part of Gadarif state also found all three sites were contaminated by both lead and cyanide. This led the authors to conclude that artisan mining affects both soil deterioration and contamination.

Mining companies have also been accused of exploiting the conflict to grow their operations. As reported by Radio Dabanga in February, residents of Talodi, a small town in Southern Sudan, noticed a significant increase in mining operations, with the number of active mixers rising from seven to 19 between September 2023 and February 2024.

Additionally, artisanal gold mining has emerged as a vital source of revenue for armed groups.

The RSF relies heavily on gold smuggled out of the country and its close ties to Russia's Wagner Group as one of its main funding sources.

How is the conflict impacting mining investment?

The government is actively seeking to attract foreign investment into Sudan’s mining industry despite the challenges posed by inadequate infrastructure and the security risks resulting from the country’s history of conflict.

As well as investing in mines themselves, there are opportunities for companies to get involved in the construction of modern refineries, integrated laboratories and other sectoral development projects.

There are some promising prospects. In March, Sudan’s Ministry of Mineral Resources granted a gold exploration concession to the Russian company Zarubezhgeologiya.

Australian company Persues Mining recently resumed drilling at Sudan's Meyas Sands gold project, which it acquired in May 2022. However, the final decision on whether to proceed will be deferred “until confidence in the future of Sudan as a viable investment destination is restored”, the company says. At this stage, there is no indication when this might occur.

Perseus holds a 70% interest in the Meyas Sands project, the Government of Sudan has a 20% stake and Meyas Nub, a local Sudanese enterprise, holds the remaining 10%. Since acquiring the project, Perseus has concentrated on advancing the development of the Galat Sufur South deposit.

Speaking in May, Perseus’s chairman and CEO, Jeff Quartermaine, described the outbreak of hostilities in the south and west of Sudan in 2023 as a “serious setback” for the company’s ambitions. Although restarting the drilling activities is considered a “positive step forward”, which Quartermaine says will hopefully lead to the development of Meyas Sands “when peace is finally restored”, it illustrates the extent of the challenge investors are facing due to instability in Sudan.