Iron Factory to open in Red Sea State

The Minister of Minerals, Kamal Abdul-Latif, announced that the inauguration of the Chinese Iron concentration Factory in the Red Sea State would be next Wednesday {September 18, 2013}. In a statement to SUNA, Abdul-Latif said that the factory is considered part of the Chinese Companies' contribution to development of the minerals sector in Sudan.

He noted that the factory operates in concentrating iron and raising its quality for preparing for international competition, affirming his ministry endeavor to develop the production of all minerals in Sudan, top of them are chrome and copper.

http://allafrica.com/stories/201309160864.html

Questions that readily arise include: Will local people get any jobs? Where exactly is this located? What return comes to Sudan? - presumably China gets the pig iron?

Oil exploration deals signed

 
Sudan has signed agreements with foreign oil companies that will allow them to search and produce oil on Sudanese territory. Though agreements cover areas in much of the country, except Darfur, several blocks are in east Sudan.

Reuters reports [in Egypt.com]  that, "Seven blocks were awarded for the first time, while some companies joined previously awarded contracts for two other blocks, [Egyptian State Oil Minister Ishaq Adam] Gamaa said. Some of the blocks are near the northern border with Egypt, some are offshore and others are near Kassala in eastern Sudan and in Khartoum state.

""The initial investment needed for these blocks is $1 billion. It will not be cash given to Sudan, but money that will be invested by those companies," Gamaa told Reuters.

"Gamaa said there would be no production at the new blocks for several years while companies carry out magnetic surveys, seismic data and drilling of exploratory wells.

Another article at AllAfrica

Gold mine needs 165 km water pipeline

To improve production of gold, a $44 million water pipeline needs to be constructed from the Nile River to the mine located about halfway between Atbara and Port Sudan. The Hassai gold mines in in the Red Sea Hills west of Port Sudan are running out of traditional ore.

Gold has been retrieved from the ore using the traditional heap leaching method. This involves pouring cyanide through many tons of crushed rock. Gold will dissolve in cyanide and a chemical process can then remove the gold from the cyanide. Gold bars are poured on site.

Diggings at the 16 open pit mines are almost complete. In 2011, 71,730 ounces of gold were retrieved. Using this standard cyanide method, the mines will be mostly depleted by the summer of 2014. For 2012, the company expects to extract 55,250 - 60,000 ounces of gold.

Canadian based La Mancha company owns 40% of the mine, and directs the mine operations. They have a plan to use a different technology to extract more gold from the tailings. This involves the application of electricity and water in a new plant to wash the dirt, thus retrieving the final grains of gold that were not captured by the cyanide method.

Using this VMS technique, the mine expects to produce 160,000 ounces of gold in the first year, once the machinery is in place. It will take about four years to go through all 12 million tons of dirt. This method allows them to extract more from the bottom of the existing pits as well. The three tested mines show promise, so the company thinks operations could run for 20 more years.

Water permits have already been approved, and the company expects to begin 18 months of construction "as soon as ownership discussions are completed with State of Sudan." The Sudanese Minister of Mines is on the leadership team or the Board of Directors of the company operations. Funding for expansion will be be completely supplied by the company. They need a plant for machinery and operations [$83 million.] They need a 165 kilometer water pipeline to bring water from the Nile River to the mining site in the Nubian Desert [$44 million.] Electricity is required, and so it will be taken from the existing line that runs to Port Sudan. A new electrical supply line will need to be built to get to the mine site [$18 million.]

Details of the current company operations are available in the corporate presentation [April 2012.]

We previously offered some details of this project in a post about six months ago.

Analysis - Sudan's new economy

Sudan's government is desperately seeking revenue, since the most of the oil funds it has depended on for the last ten years now accrue to the benefit of South Sudan. President Bashir must reinvent the economic engine for north Sudan.

The development needs of the country remain immense. While a number of high-profile construction projects have been launched in Khartoum, they haven't served the needs of the country, except to provide good quality housing and office space in the capital. Many projects have been built with foreign funds, primarily Chinese.

Attempts have been made to charge exhorbitant transit fees for the oil that the south wants to sell - up to half the value of a barrel of oil. Negotiations continue.

Alternate income generating ideas include selling land to the Egyptians and Suadi Arabians so they can grow crops. Agricultural exports need to increase, so greater planting efforts will be made on farms around the country. The vagaries of climate make that a hit and miss strategy. There's not much of an industrial base, so north Sudan has few manufactured goods to sell on the international market.

What's left to get development funds?

One: Resources in the ground. Water, iron, oil and gold. Two: Asking for help

We note the successful construction of the Meroe dam. Electricity capacity has doubled in the country, but is still inadequate for large scale industrial purposes. Irrigation has enabled the development of farming downstream.

How long will the Meroe dam be useful? No estimate has been released. Sediment will settle into the lake behind it, eventually reducing the holding capacity of the dam.

There is an iron mine in north east Sudan, and exports to China were announced on October 27, 2011. About 4,000 tons were shipped, and over the next few years, there are expectations that 40,000 tons of iron ore will be shipped to the far east.

North Sudan has released large blocks of land for oil exploration. Some companies have taken options at an 85/15 [company/Sudan] split and begun work to search for oil. One drilling effort has been off the coast in the Red Sea in the Tokar region, beginning in February 2010. Only time [and foreign investment and expertise] will tell how much oil is in the ground.

The news comes out today that north Sudan has signed 50 contracts allowing mining companies to search for gold in various states across the country.

The Minister of Minerals announced that three Jordanian, Chinese and Turkish companies have started gold production, thus increasing the number of gold producing firms to seven. He further said that the construction of a gold refinery would begin in 2012.

 

26 kilometer road at the Sudan Eritrea border, built with Qatari money

A $9 million dollar 2 lane road was built and paved with funds from Qatar. It runs from Kassala to the Eritrean border and beyond. The road was officially opened on October 26, 2011.

On October 24, 2011, AllAfrica reported that The Sudanese First Vice President Ali Osman Taha paid a one-day visit to Kuwait for talks focused on ways the Arab Gulf state can bolster its investments to aid the beleaguered economy.

In December 2010, a short conference was held in Kuwait, and donor agencies and countries pledged 3.5 Billion dollars in gifts, grants and investments to help develop the east of Sudan. Many posts here.

Tractor picture at top from the US Sudan embassy website. Presumably assembled in Sudan.

Gold mine to expand in Nubian Desert

The Hassai gold mine as been the source of digging for 20 years, and the operators are planning to expand it. It is located east of Atbara, north of Musmar.

The current pit technology has reached its limits, and gold production is shrinking. A new technology will be implemented in 2015, which will allow gold production to return to higher volumes for a few years more. Copper will also be extracted from the earth.

An article by Reuters explains the new developments, published at Sudan net

Company details are watched on a gold site. Charts, stock prices, etc.

A press release [pdf download] from the company proclaimed the latest test drilling results a few weeks ago.

Documents from the company explain the operations. About 500 Beja are employed on site.





This article at Sudan. net offers a few more details.

Bashir looking for economic renewal

Since the Republic of South Sudan [RoSS] has declared it's independence, the leader of north Sudan has awoken to a new financial reality. The oil money is going, and soon will be gone.

For generations the revenue for the country of Sudan has come from the sale of agricultural products like cotton, sugar and gum arabic. When oil was discovered by Chevron in 1980, new possiblities opened up. An 1600 km oil pipeline was constructed from the oil fields across the country to Port Sudan. It opened in 1999.

The first eleven years of the 21st century belonged to Sudan. With new wealth that came from selling oil, Sudan aggressively pursued a building construction program for Khartoum, and the purchasing of military tools. The plan for Arabizing the country continued, with civil wars in the east, the south and the west, as minority groups resisted the marginalization, Islamization and destruction of their tribes and cultures.

In Sudan as a whole, oil sales revenue provided over 90% of the country's income during the first decade of the 21st century. This means that oil income was 10 times more than all the agricultural sales, which provided most of the income in previous years.

Sales of oil to China and other Asian countries provide $300-400 million US per month. After the Comprehensive Peace Agreement was signed, the income was split, about 2/3 to the north, and 1/3 to the south. In the south, of total revenue, new oil money provided 99% of income in 2006.

Most of the oil is in RoSS ground, and so sales of the oil will now all belong to the south. The north must seek to replace the oil revenues, or else return to the meagre income that agricultural sales brings.

How will the south spend their oil money?

The government of the republic of South Sudan has an agressive plan for creating a modern nation state. They are building a new national capital. Government services have to be put in place. Security services and military forces have to be established and maintained. They are creating a banking system, roads are being paved, a pipeline to Kenya's coast is being planned.

The government hopes to eradicate extreme poverty and hunger, and provide universal primary education. They have plans to combat HIV/AIDS, malaria and other diseases, and they want to ensure environmental sustainability by providing clean water and sanitation.

What is Bashir doing to replace oil revenue?

A plan was announced in February, 2011, just after the referendum, to spend 3 years creating a detailed map of north Sudan. The country is attempting to take an inventory of their physical resources. In the process of making the map, the government hopes to discover new mineral resources.

Gold mining is currently the only active high value resource extraction in the country. In the spring of 2011, various north Sudanese officials boldly proclaimed that gold mining would expand, thus making Sudan rich.

The government is more receptive to foreign companies who want to come in and look for gold, iron, etc. In addition, the government is interested in processing minerals. This added value work will provide employment for Sudanese. The export of raw iron has been outlawed.

For the oil in the ground, some of it actually is within northern boundaries. Sudan plans to double the production, which will draw down the overall amount more quickly, but it will smooth out the declining revenue of the country.

Sudan is planning to charge a fee to RoSS for every barrel of oil shipped through the pipeline. South Sudan wants to pay a fee of 41 cents per barrel. North Sudan wants to charge a fee of $21 per barrel. Actual costs of shipping the oil run about $3-4 barrel.

UPDATE: Sept 2. Reports of ongoing negotiation say that north Sudan wants to charge $32 barrel, while South Sudan has moved up from the minimal opening bid to a more realistic $4-7/barrel. Read the complete article at http://allafrica.com/stories/201109020968.html

Thousands of acres of new land will be planted, to increase agricultural production. Certain lands have been subject to exclusive deals to provide crops to Saudi Arabia and Egypt. The Kenana sugar production factory has been expanded. In December 2010, they expected to plant 500,000 feddans of cotton in 2011-12. In July 2011, that estimate had risen to 640,000 feddans.

In addition to increasing production in the country, President Bashir is looking for money from friendly countries. Sudan has asked all its ambassadors to seek out connections with possible foreign investors.

Sudan is also looking for millions of dollars worth of debt forgiveness.

For east Sudan, the Kuwait Donor and Investment Conference was held in December 2010. Over $3 billion was pledged. About $700 million was pledged by Sudan itself, yet we believe this is the same money that was previously pledged at the signing of the East Sudan Peace Agreement in 2006. Still, other countries have stepped up to help by offering millions of dollars for investment projects like cement plants, roads, water and electrical improvements, and colleges.

Gold mine expansion

In May 2011, La Mancha made a decision to move forward toward construction of a mining plant starting in the fall of 2011. The Hassai mine complex has over a dozen open pit mines. A few of them have more gold and copper that can be extracted.

This expansion requires the construction of a 165 kilometer water pipeline from the Nile River. It will be 50 cm in diameter. The pipeline will cost about $44 million US. Until now they have been using rainfall water stored behind a dam, and piped water from boreholes.

Also required is more electricity, and a 77 kilometer line will be built to connect with the existing Atbara - Port Sudan line. The mine will need 34 megawatts of power. The powerline will cost about $19 million US. Until now they have been using onsite generators.

The overall costs for expansion will be about $187 million US.

In addition, a document published by LaMancha states that more people will be needed to work on the expanded mine site.

18.9.3    Accommodation
The existing Hassai camp is located approximately 3 km from the current heap leach operation. This camp currently accommodates 600 personnel (expatriates and locals) and includes accommodation, mess hall, bakery, local market and recreational facilities. On-site communication allows mobile phone and internet access.

A new accommodation village will be developed for the CIL and VMS plants, to accommodate workforce requirements. A 200 person camp has been allowed for in the capital cost estimate by Sedgman for the CIL operation, while accommodation for a further 500 persons is included by AMEC in the VMS concentrator estimate.

 The first camp for the concentrator operations includes 126 labourers, 74 maintenance men and 10 professionals. The mine operators currently hire Hadendowa Beja.

 Gold reserves will eventually end, and the mines will be abandoned. La Mancha developed this interesting chart that shows metal production may end in only 14 years.

Source material for this article comes from various documents on http://www.lamancha.ca/

Gold - Sudan wants more

The Ariab open pit mine has lots of potential for extracting more gold. [January 2011 report]

The Ariab gold mine has been reported as offering 10 tons of the precious mineral in 2010. The mining region is north of Musmar in the Nubian Desert. That's located east of the Nile, and west of the Red Sea Hills, north of the Atbara-Port Sudan highway.

Ten tons of gold can be estimated as having a value of almost $500,000,000. [assuming $1400/oz]

In a public and private partnership, France has signed an agreement with Sudan to research the ground using modern technology to prospect for mineral deposits. Research results would be offered to mining firms to invite their investment for development. Sources for groundwater will be included in the search. Training Sudanese cadres is part of the program.

La Mancha Resources owns 40% of the mine. 

Sudan has divided the country into large areas of land "blocks" or "concessions." Mining companies bid for rights to explore and extract minerals from these blocks. View the  status of agreements for these regions in this map.

Economy- Is oil creating a spree?

A World Bank report challenges Sudan's spending over the past decade. Has the country gone on a spending spree that is wise?

Sudan must use its oil production, which has helped to quintuple the size of its economy in the past decade, to create more balanced and sustainable growth, the World Bank said.

With an independence referendum due in January in Southern Sudan, the source of most of the country’s oil, the government in Khartoum needs to invest in agriculture and other non-oil industries, and reduce the dominant role of the state, the bank said yesterday.

“While oil-led growth over the past 10 years has greatly improved the Sudanese economy, its sustainability is under threat,” the bank said in a statement announcing its latest Country Economic
Memorandum on Sudan.

Sudan’s rapid economic development has also created tensions that threaten to spark instability, the bank said. War has raged in the western region of Darfur for the past seven years after rebels took up arms, accusing the Khartoum government of neglecting the region.

“The unbalanced development of the country, with a large disparity between the center and periphery, remains a potential source for conflict and political instability,” the bank said.

President Umar Al Bashir’s government needs to allow a greater role for private companies and start “developing the agriculture sector as the next big alternative source of growth to the oil sector in the medium-term,” it said.

Economic Expansion
Sudan’s gross domestic product expanded to $53 billion in 2008 from $10 billion in 1999, the year oil exports started, the bank said. Annual per capita income increased to $532 in 2008 from $334 in 1999, it said.

“Oil wealth has enabled Sudan to roll-out a massive expansion of its physical and social infrastructure including a doubling of the road network and electricity generation,” the bank said.
About 70 percent of Sudan’s crude is pumped in the semi-autonomous region of Southern Sudan, central bank Governor Sabir Hassan said in a June 9 lecture in Khartoum.

Companies including China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s Natural Gas Corp. pump the bulk of daily output of about 490,000 barrels. Sudan is sub-Saharan Africa’s third-biggest oil producer, according to the BP Statistical Review of World Energy.

“If Southern Sudan secedes, it could affect the economy negatively unless the government takes measures to counter it,” Hassan said.

http://www.sudanvisiondaily.com//modules.php?name=News&file=article&sid=57878
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Gold reserves expand after exploration

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La Mancha is a Canadian gold producer that has a 40% interest in the Hassai open pit mine located 450 km north east of Khartoum. That's east of the Nile in the Nubian desert, about 50 km north of Musmar. Some Beja are labourers there.

A news release on September 10 announced a reserve of over 1 million ounces of gold, and confirmed a very rich zone of minerals near the bottom of the current pit.

Investors greeted the news with excitement, and the price of the stock rose almost 20% the same day.

La Mancha trades on the Toronto stock exchange under the symbol LMA.

News Release
http://bit.ly/g0Wk

Stock Chart
http://cxa.marketwatch.com/TSX/en/Market/intchart.aspx?symb=LMA&sid=175873

UPDATE: October 16 - stock price has doubled since beginning of August.
UPDATE Feb 2010 - video describing gold production at the Ariab mine. Very good! 15 minutes.
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http://www.youtube.com/watch?v=ueSfHwpa2h0