Sudan: no risk no reward

Despite its political instability, the geology of Sudan and South Sudan is favourable for hosting important gold as well as other mineral deposits. The question is whether anybody has the appetite to take on the risk, writes Leon Louw, editor of the magazines African Mining and Mining Mirror. 

After flowing through hundreds of kilometres of mountains, hillocks and desert, the Blue Nile and the White Nile join forces at the rain-starved city of Khartoum. From its origin in Lake Victoria, the White Nile slowly makes its way through the ancient Kingdom of Kush. It is the major river of South Sudan, where it forms a huge inland delta north of the capital Juba, known as the Sud. From the confluence at Khartoum, the river is known as the Nile — believed by some to be the longest river on earth. In modern times, the ancient Kingdom of Kush was renamed Sudan (after the Sud of South Sudan) and Khartoum became its capital. Although the Nile and its tributaries traverse 10 countries, most of the water flows through the extremely arid countries of South Sudan, Sudan and Egypt, before depositing huge amounts of fertile silt to form the Nile delta at its point of entry into the Mediterranean Sea.

Sudan and the recently independent country of South Sudan have been plagued by ethnic violence and destructive conflict for centuries. Peacemakers in the country hoped for respite when South Sudan gained independence from Sudan on 9 July 2011, but while the celebratory fires were still burning high in the capital of Juba, a new wave of violence engulfed the countryside. Sudan gained independence from the British/Egyptian Condominium Rule in 1956. An Islamic military regime has ruled since 1989. Sudan continues to suffer from protracted social and armed conflicts in South Kordofan, Darfur and the Blue Nile states.

“The conflict is about resources, power, religion and race. It started originally between the north and the south and was about national identity and resources, especially oil. However, later it started to spread to other parts of the country and these are mainly struggles about power, development and identity,” says Prof. Amira Osman, associate professor FADA at the University of Johannesburg. “Many conflicts have been instigated by climate change, desiccated environments, and dwindling resources,” adds her husband Dr Elbashir Osman, a Sudanese surgeon working at Kalafong hospital in South Africa.

On the bright side

“Following the end of the war in Sudan and the declaration of independence of South Sudan in 2011, the situation in both countries remain tense. One of the main events was the suspension of oil production in South Sudan in 2012 due to conflict around the use of the oil pipeline through Sudan,” says Dr Nicolaas Steenkamp, an independent geological consultant familiar with Sudan. Despite the political climate, a number of geologists and exploration companies have been active in the region. “Many areas in South Sudan are highly prospective for gold,” says Morris Viljoen, emeritus professor of mining geology at Wits University in South Africa. Viljoen and his twin brother Prof. Richard Viljoen, who was an honorary professor at Wits, have been involved as consultants on exploration projects in South Sudan since 2006. These two renowned geologists are technical advisors for a South African based junior exploration company called New Kush Exploration & Mining. New Kush holds prime ground in the largely unexplored prospective terrain, with granitic, sedimentary and volcanic rocks favourable for hosting various mineral deposits, particularly in the southern and eastern portions of South Sudan. The New Kush concession covers 2 500km2 in eastern Equatoria, and the company was recently awarded the first full prospecting license under the regulations of 2015, which were put in place under section two of the newly promulgated Mining Bill of 2012,” says Morris Viljoen. The New Kush concession area is currently being extensively mined by artisanal miners, and as in all other African countries, this is a good indication that significant bedrock gold deposits should exist in the area.

“We believe that some of the deposits could be similar to the important Navachab and related deposits in the Erongo region of Namibia,” says Morris Viljoen. New Kush has set up operations in the area and is currently testing material brought to them by artisanal miners. Each miner brings in about five or six bags of soil per day, which has the potential to yield about 10 grams of gold. “We are of course interested in the bedrock gold below the surface material, but we still have to carry out a drilling programme to prove the bedrock resource, and need additional finance for this,” says Richard Viljoen. However, it is easier said than done, as the infrastructure network in Sudan is still limited and foreign investors are still treated with scepticism. New Kush has identified a number of targets, and once the situation stabilises will invest further financial resources, including an intensive diamond drilling programme. According to the Viljoen brothers, a number of well-known companies have shown interest in the project. “We’ve looked very closely at Sudan’s geology but, although impressive, we still regard it as too risky,” Mark Bristow, CEO of Randgold Resources told African Mining at a media lunch last year.

Weighing up risk and reward

Although the potential for locating significant gold deposits in Sudan looks good, the question is whether investors would have a big enough appetite for risk. According to Peter Major, director mining at Cadiz Corporate Solutions, they might. “As a fund manager and investor I have to make money. If the deposit is shallow, has low beneficiation and capital requirements, and I can get all my money back in two years, in fact double it, then I will listen to you,” says Major. “If you tell me you want to go to a high risk region like Sudan, I want at least a 40% real return in two years, not five or 10 years, and that is the reality. Is it possible in Sudan? We don’t know, do we?” adds Major. The fact remains, and the Viljoens would concur, that not enough exploration has been undertaken in Sudan, but more specifically South Sudan. “South Sudan is considered terra incognita with regard to its economic geology, but this is precisely why it is so attractive to us,” says Morris Viljoen.

Mining north of Khartoum

Despite Sudan’s great geological potential, there is a palpable absence of large exploration projects and operating mining companies. Apart from New Kush’s exploration project and artisanal mining in the south, no other mines are operating in the region. However, in the north, close to Khartoum in Sudan, the government owned Ariab Mining Company (AMC) has been operating the Derudeb and Hassai mines for more than two decades. The Sudanese government owns 95% of the mine and the other 5% belongs to the Industrial Development Bank. According to AMC, Hassai has produced over 85 tons of gold and 37 tons of silver since the early 1990s. Heap leach technology is used to liberate the ore. Hassai is located 450km north-east of Khartoum and 350km south-west of the harbour of Port Sudan. A 75km paved road links the mine to the interstate highway to Port Sudan.

AMC’s other concession, Duredeb, is located 250km south of Port Sudan near the main city of Derudeb at the Sudan and Eritrean border. Previous exploration in the area has confirmed the existence of a volcanogenic massive sulphide (VMS) ore deposit with traces of manganese, tungsten, zinc and copper. According to the company a recent geophysical survey to the west of Duredeb has led to the discovery of another VMS, which the company started developing late last year. Access to the project via an asphalt road, proximity to the harbor, and sufficient electricity and water make the project look viable.

A possible treasure chest?

According to Steenkamp, gold occurrences are found in the northern and north-eastern parts of Sudan in the Basement Complex rocks. “The gold mineralisation is mainly in the form of auriferous quartz veins of various thickness. The veins generally strike north-east to south-west and east to west. Alluvial gold is found in the White Nile, Juba, Kapoeta, and areas in southern parts of South Sudan,” says Steenkamp.

But Sudan is not only blessed with gold deposits. Beryl is found in the pegmatite of the Bayuda desert in central Sudan and chromite occurs in the Ingessana Hills. Small chromite occurrences have also been reported east of Qala En Nahal, where it is found as small veins and lenses or disseminated in serpentine and talc-carbonate rock. “In the area of the Red Sea Hills, narrow bands of chromite are found in association with magnesite in serpentine country rock intruded by granite batholiths,” says Steenkamp.

Copper with a grade of up to 4.1% was mined as long as 200 years ago in the Hofrat En Nahas deposit, while iron (Fe) deposits are located in the area of Jebel Abu Tulu in the form of two huge bands of heamatite, with grades up to 63% Fe and minor magnetite enclosed in a quartz-sericite schist of the Basement Complex rocks. The orebodies have been displaced by fracturing. The Red Sea Hills also host a number of iron ore deposits. The Sofaya iron ore deposits occur in seven localities, where the ore is hosted by meta-sedimentary and meta-volcanic rocks in the Basement Complex. The ore forms lenses and occurs along the contacts of dykes. The Fodikwan ore body is an alteration type deposit, consisting of heamatite after magnetite with minor goethite and limonite. In the northern Dafur province, the Jebel Barberi deposit consists of specularite and massive heamatite emplaced within the granitic gneiss of the Basement Complex. Uneconomical oolitic iron occurrences are found in the Nubian Sandstone Formation.

The Ingessana Hills, Qala En Nahal and Haleib host magnesite in highly altered ultra-mafic rock. The magnesite is associated with talc-carbonate and serpentine schist lenses. Bauxite deposit has been identified in South Sudan. The bauxite usually underlies laterites and varies in thickness between four and 20m thick with aluminium-oxide content of more than 30%.

Surveys have identified manganese in the Red Sea Hills in the form of epigenetic manganese occurrence. It occurs as vein and fissure fillings within the metamorphosed Basement Complex rocks, or as stockwork cementing the basal conglomerate in the coastal sediments. In the Berber area, manganese occurs as small veinlets within the gneiss and chlorite-sericite schist of the Basement Complex rocks. The main manganese minerals are psilomelane and pyrolustie, with grades ranging between 25% and 45%. The manganese in the Upper Nile province occurs as syngenetic manganese, while manganese occurrences have also been reported in the Umm Ruwaba Series.

Lead-zinc is found in the Kutum deposit, where the ore occurs as small veins of up to 50cm wide, and is reported to extend over several hundred metres within the gneiss and schist of the Basement Complex. The mineralisation is derived from hydrothermal solutions emanating from the granite intrusions to the south, which migrated along the shear zones and fractures. The mineralisation consists of galena, sphalerite and pyrite, with subordinate arsenopyrite, marcasite and chalcopyrite. Limonite, cerussite and anglesite are found in the oxidised horizon.

Tin and Tungsten are found in hydrothermal quartz veins and fissure fillings, and contain cassiterite and minor wolframite. North of Khartoum, tin-tungsten mineralisation is found in stockwork and greisen in microgranite and as joint and fracture fills in the granitic gneiss of the Basement Complex rocks. The mineralisation consists of cassiterite and wolframite with minor scheelite, molybdenite, galena and calcite.

Flourite is found in the Kordofan province as small veins and fracture fillings within the undifferentiated Basement Complex rocks. Graphite is found in uneconomical quantities in various locations throughout the Sudan, while gypsum mineralisation occurs along the Red Sea coastal plain. Of these deposits, the Bir Eit gypsum deposit is the largest. Limited quantities of gypsum is locally produced for domestic application in the cement and chalk industries. The Basement Complex hosts marble deposits throughout Sudan and is quarried for the cement industry, dimension stone, and for the production of burnt lime.

According to Steenkamp, oil and gas exploration is one of the focus areas. “Several wells have been drilled along the Red Sea coastal plain and offshore in the central part of Sudan and South Sudan. Deep buried sedimentary basins beneath Quaternary cover, in the Rift Valley sediments, have the most potential to host oil reserves,” says Steenkamp.

Challenges remain

If Sudan were a stable country, potential mining investors would be falling over their feet to unearth its buried treasures. However, the country has a long way to go to become a first class mining jurisdiction. The risks of investing in the country are great. According to Amira Osman, conflict continues in peripheral areas and there is a serious lack of decent infrastructure. “Poverty remains a problem and Sudan ranks at number 167 in terms of the ease of getting credit.” 

Sudan introduced a new currency, SDG (still called the Sudanese pound) following South Sudan’s secession, but the value of the currency has fallen since its introduction. Khartoum formally devalued the currency in June 2012, when it passed austerity measures that included gradually repealing fuel subsidies. Sudan also faces high inflation, which reached 47% in November 2012 but subsided to just under 18% in 2015. More austerity measures have recently been announced and have led to some protests and unrest. The country’s currency is extremely volatile and unstable.

Elbashir Osman says that according to government sponsored media, steps have been taken to encourage foreign investments, especially in mining and agriculture. “There is huge interest from the Russians and Chinese in mining, and the Gulf countries in agriculture. But there are also reports about rife corruption,” says Elbashir Osman.

The oil sector had driven much of Sudan’s gross domestic product (GDP) growth since 1999 with a GDP per capita of USD4300. The GDP growth rate is estimated at 3.5% with an industrial production growth rate of 2.7%. The country is attempting to develop non-oil sources of revenues, such as gold mining, while carrying out an austerity programme to reduce expenditure. “Sudan is also subject to comprehensive US sanctions. In 2011, Sudan lost three-quarters of its oil production due to the secession of South Sudan and therefore faces serious economic challenges,” says Amira Osman.

According to Steenkamp the awarding of prospecting licenses were suspended between 2010 and 2012, when a new mining act was signed into force. “The concern remains, however, that the current mining act has left room for political influence with respect to the granting of licences, and the distribution of benefits from mining ventures and applicable standards.”

Steenkamp adds that the large-scale artisanal operations in both countries could become a problem for mining companies in future. “Both Sudan and South Sudan have vulnerable borders, which increase the risk of illicit trade in the region, especially gold,” says Steenkamp.

A number of infrastructural issues have plagued the development of the mining activities in both Sudan and South Sudan. The lack of heavy load-bearing roads and an ineffective railway system hamper the transport of bulk materials. Mining operations also require adequate, reliable electricity. At the moment there is not sufficient supply in Sudan, and cities and towns are reliant on diesel generators. “The lack of fuel for vehicles has also been reported by contractors operating in the country,” says Steenkamp. In addition, the landlocked geographical setting of the South Sudan is one of the stumbling blocks in developing the mining potential of this country. Despite these challenges, however, the time is ripe for early-stage exploration target development, the Viljoens conclude.