Escalating conflict in Sudan has brought official gold trade to a halt

On May 22nd, the head of Sudan's state-owned mining company said that due to a month of escalating conflict in this North African country, the country's largest source of income - the official gold industry - has completely collapsed.

The general manager of Sudan Mineral Resources Co., Ltd., Mubarak Ador, said that exports have come to a halt, processing equipment has been damaged, and several gold company headquarters in the capital Khartoum have been looted. Last year, Sudan officially exported 34.5 tons of gold, worth over 2 billion US dollars.

But Ardol stated that since the outbreak of fighting between the Sudanese army and paramilitary rapid support forces on April 15th, it is questionable that "even an ounce" of people have left Sudan. According to the World Health Organization, more than 600 people have died and thousands have been injured since then.

According to local media Medias24, Morocco's most valuable metal mining company, Managem, has stopped production at its Wadigagaba gold mine in the northeast and has sent workers back to the country. After the violent incident, the company's stock price fell by 13.7% at one point, but later regained some of its lost land.

Although the warring parties signed an agreement in Jeddah, Saudi Arabia last week to protect civilians and promote the delivery of humanitarian aid, according to interviews with local residents and United Nations internal security documents seen by Bloomberg, the fighting continues.

System shutdown

Ardol's job is to manage and enforce safety standards in the Sudanese gold market. He said that although producers are still mining gold ore, the main processing sites have been destroyed by the conflict, and the financial and customs systems have also been closed.

From upstream to downstream, everything has been destroyed now, "he said in a phone interview from Sudan. Due to the remittance process, people are unable to export. Banks are closed, central banks are closed, and refineries are also unable to enter

Gold is an important source of revenue for the Sudanese government, mined through companies such as Perseus Mining in Australia and Alliance for Mining Co. Ltd. in Dubai. But according to the Sudanese Ministry of Finance, the vast majority of its products are smuggled abroad, usually to foreign processing centers.

Both Reporters Without Borders and the Sudanese army hold large shares in the gold industry in Sudan, and have been accused by activists and human rights organizations of smuggling large amounts of illegal gold abroad. The Russian mercenary company Wagner Group is also linked to a gold processing facility in northern Khartoum.

But it is currently unclear whether both sides have the ability to transport minerals from remote airports to provide funding for their respective actions.

Although the authorities in Khartoum emphasize that security forces control the country's borders, a United Nations team stated in a report last year that "smuggling of vehicles, alcohol, drugs, cosmetics, and gold, as well as arms and human trafficking," is widespread in the border areas between Sudan and South Sudan, the Central African Republic, Chad, and Libya.