The plight of traditional minings of gold in Sudan

By Prof. Ibrahim Onour
University of Khartoum

In recent years, Sudan has witnessed a wide range of gold-mining operations by artisanal miners in many states in the country. As of 2019 about 2 million people from all parts of the country participated in gold mining activities. Despite the rising importance of gold mining in the national economy, the gold industry in general seems improperly managed as artisanal gold mining in the country takes place on geographically extensive territories, while the government administrative bodies have often insufficient resources to monitor the mining activities, in addition to the poor governance system to manage national mineral resources in general. Studies on gold production management are scanty and informal in most cases as data availability is the major constraint to search it in depth. However, recent studies (Mathias and Feys, 2014; Oomes and Vocke, 2003; Bloomberg, June 21,2013) report four major causes behind smuggling of precious metals in developing and under developed countries. First, precious minerals can be smuggled from producer to consumer countries, to finance armed conflicts. This motive can be very strong in countries facing internal armed conflicts, as the current case in Sudan. Second, it could be the case to avoid domestic taxation, and for that reason producers refrain from declaring the real value of their production to the authorities to minimize their tax exposure. Third, as a vehicle for laundering, as precious minerals can be purchased with illegal funds, such as the proceeds of drug or human trafficking. As an illustration, drug dealers in the U.S. were alleged to have purchased gold with the proceeds of drug trafficking. This gold was then reworked and disguised into everyday items in order to ship it back to a South American nation. Drug gangs in Western Europe have reportedly turned to the diamond trade to launder funds. Also, precious minerals are attractive because they can be used in trade based money laundering schemes, as a cover for laundering illegal funds generated by other crimes, for example through price manipulation or false invoices covering fictitious sales of gold or diamonds when, in fact, the money was generated by various offenses. The proceeds are thus passed off as having been generated by the legitimate buying and selling of gold or diamonds. Fourth, precious minerals can be used as an alternative currency to purchase prohibited or restricted goods, such as gold for cocaine, and diamonds for weapons, or as a mean to store wealth generated by illegal activity and avoid seizure and confiscation.
While the existing literature on the issue of gold and other precious metals focus exclusively on smuggling as a sign of mismanagement of precious metals, the current paper addresses the mismanagement issue of gold production in Sudan from a different perspective which may be common in a number of underdeveloped nations where gold production is handled through traditional refinement activities. The paper addresses the issue of financial cost of using inefficient mining and extraction techniques in gold production that leaves out sizable portion of residual substances (known as kurta in Sudan) which requires more sophisticated technologies for further refinement to become sellable gold. Sizable portion of kurta either is left untapped or smaller amount of refined gold finally extracted from it with high additional cost that makes it uneconomical. As a result, in this paper we name this portion of gold substances as missing wealth.