By Kei Emmanuel Duku
In the remote area of Greater Kapoeta, South Sudan, a gold rush has almost turned the region upside down. What began as a promising opportunity has quickly become a major problem for the local community and the country’s economy.
“Initially, the gold trade was seen as a chance for prosperity,” says one local miner. “But it has turned into chaos, with most of the gold being smuggled out and benefiting everyone except us.”
Over the past year, despite efforts to regulate gold mining, the industry in Kapoeta remains in disarray. Instead of aiding the local economy, the gold trade is entangled in illegal activities and corruption, enriching foreign traders and corrupt officials.
The government of South Sudan introduced new rules to control the chaos, but these measures have proven ineffective. The gold continues to flow through Uganda and Kenya, where it is refined and sold internationally, with little benefit for South Sudan.
Several artisanal miners often use their unpurified gold to barter for Kenyan goods smuggled across the border. The devaluation of the South Sudanese pound against the Kenyan shilling has rendered it worthless in the informal markets of Kapoeta, leading to most transactions involving illegally mined gold being conducted in US Dollars.
The history of gold in the Eastern Equatorial State dates back to the late 1970s when the Southern Regional Government of Sudan contracted a British company called Hunting Geology and Geophysics Limited to undertake mineral explorations in the 30,000 square kilometers of what was then Southern Sudan, now present-day South Sudan. The exploration reports found a vast amount of minerals in two states, mainly Central and Eastern Equatorial states.
The 1970s survey was reinforced by a 2013 Ministry of Petroleum survey, which indicated the presence of gold in Greater Kapoeta and Nimule Town in the Eastern Equatorial State, as well as Kajo-Keji County, Lobonok County, and Luri Payam-Juba County in the Central Equatorial State. Napotpot, Lauro/Didinga Hills, Naknak, Nakakeke, and Namurnyang are some of the areas rich in gold in the Eastern Equatorial states. Namuranyang is one of the busiest gold hubs where open gold trade takes place, with miners selling gold openly to local dealers despite government restrictions.
Government crackdown, smuggling, and market challenges
As of December 2023, the government of South Sudan had issued a total of 74 exploration licenses, including 19 small-scale licenses. Currently, 41 companies are active, though four licenses have expired, and 38 are pending revocation.
The South Sudan Mining Act of 2012 allows the government to terminate and revoke an operation license if the licensee fails to honor the agreement. Licenses may also be revoked for non-compliance with environmental regulations, failure to pay application fees, or inadequate capital for mining operations.
The length of a mining license depends on the type. A large-scale mining license lasts up to five years after an exploration license expires, while a mining license can last up to six years after an exploration license expires.
In Kapoeta South, companies like Asawa Mining, New Kush Exploration, Equator Gold Ltd, Gold Leaf Ltd, and the Australian mining company NUCO were issued exploration licenses. However, NUCO’s license was terminated for violating concession terms.
In April 2021, the state government issued a ban on gold mining, stating that mining activities were not benefiting the locals. Lobong had directed artisanal miners to sell gold only to the Kapoeta State Investment Cooperatives, but the ban was short-lived as miners were dissatisfied with the low prices offered by state authorities.
By the time of the ban, the government was buying gold at $50 a gram (3,000 South Sudanese pounds) on the black market, compared to the government price of $33 (1,800 South Sudanese pounds) before inflation.
A report published in May 2021 by the Global Initiative Against Transnational Organized Crime indicates that gold mines in the South Western Gorom area of Juba County produce at least 100 grams of gold daily. This area is controlled by government and political elites, with gold sold on the black market before being flown out of the country.
Dr. Pitia Cosmas, Undersecretary in the Ministry of Mining, notes that many mining companies had their licenses revoked due to insufficient financial capacity for gold exploration. Among the 41 active companies are Asawa Mining Ltd, New Kush Exploration, and Gold Leaf Ltd in the Eastern Equatorial State, as well as some in Juba County of the Central Equatorial State.
Dr. Pitia also highlights that, despite being legally registered, a lack of supervision by state and national governments has led to mining companies violating concessions, resulting in conflicts between locals and companies.
An April 2020 report accused Louis Lobong, the Provincial Governor of Eastern Equatorial State, of issuing licenses to Mega Wild Ltd and Fortune Minerals Ltd for areas already occupied by New Kush Exploration and Mining Ltd. Both the national and state governments deny these claims.
During the first South Sudan Economic Forum in Juba, aimed at attracting investors, Dr. Dhieu Mathok, Minister of Commerce, Industry, and Investment, noted that many companies with exploration licenses violated their concession terms and ventured into gold mining. He emphasized that gold smuggling occurs in areas like Greater Kapoeta, Kajo-Keji, and Pabior.
“Smuggled gold is refined in neighboring countries (Kenya or Uganda), and the profits are sent directly to foreign company accounts, bypassing our national treasury,” explained Mathok.
A report published by Swiss Aid in May 2024 noted that the United Arab Emirates is fueling conflict in Africa’s gold-rich countries by buying gold from artisanal miners, many of whom are militia or unlicensed dealers. Countries involved include Cameroon, Egypt, Niger, and the Central African Republic, while in the East African region, Sudan, DR Congo, and South Sudan are also affected.
The report further notes that about 60% of South Sudan’s gold is transited through Uganda, with the remainder going directly to the UAE.
Another report by the Anti-Corruption Resource Centre in 2021 showed that over $4 billion worth of gold from Central and East Africa was exported through Uganda and other East African countries in 2019. In 2022, Dubai exported 317 tons of gold from conflict-affected and high-risk areas, with 97 tons (68%) from Africa, including South Sudan.
Emirati customs records in Dubai indicate that gold exports from South Sudan, Chad, Ethiopia, and Eritrea were reported to UN Comtrade. However, No.1 Citizens Newspaper could not obtain the exact quantity of gold exported from South Sudan to the UAE as reported in the UN Comtrade Database.
Mohammed Ali, a businessman in Kapoeta Town, says the unstable exchange rate of the US Dollar against the South Sudanese Pound has forced miners and traders to smuggle precious metals to Nairobi or Kampala. “The government has set a fixed price, but we in the black market offer slightly higher prices based on the exchange rate. This attracts many artisanal miners,” Ali explains.
He notes that most traders who buy gold from artisanal miners in Kapoeta smuggle it to Kenya, where it is refined and exported to India, China, and Turkey. “The gold is smuggled through the Lokichoggio border to Eastleigh, Kakuma town, and the refugee camps. We then receive our remittances through M-PESA money transfer,” Ali adds.
Smuggling and Refining of Gold in Uganda
Besides Kenya, Uganda is another major transit route for gold in the Eastern African region, where large quantities of gold are not declared for import.
According to media reports, Ugandan customs statistics from 2018 to 2021 show that the country of origin of gold imported into Uganda has often been incorrectly declared to Ugandan customs authorities.
Uganda is a key transit route for gold from South Sudan and the Democratic Republic of Congo (DRC).
Gold from these countries is smuggled into Uganda, where it is refined and issued with a certificate of origin. This process inflates Uganda’s total export volumes.
Discrepancies in gold export figures
According to a report by the Global Initiative against Transnational Organized Crime in 2019, Uganda earned over $1.25 billion from gold exports transiting from South Sudan and Congo to Dubai, Mumbai, and Antwerp—more than double the amounts of previous years.
However, these figures conflict with Emirati customs statistics, which show that between 2012 and 2022, gold exported to the UAE ranged between 243 tons and 609 tons, representing about 58% of UAE exports.
Gold movement across borders
Vision Minerals Limited, a purported Ugandan gold mining company, has previously operated in South Sudan, specifically in Nyaminye, Kala 1, and Kala 2 Rivers in Kajio Keji County, Central Equatorial State.
The company’s Chief Executive Officer, Jingo Fazil, mentioned that Vision Minerals worked with rebels and government soldiers but ceased operations in 2016 due to escalating conflict. Fazil noted that gold prices sold to foreign companies vary between $50,000 and $550,000 per kilogram.
Vision Minerals, with its office in Uganda, also operates in the DRC, Tanzania, and Zambia, and has business partners in Dubai, Canada, and Hong Kong.
Although Fazil claims that the company is registered in Uganda and conducts business legally, the No.1 Citizen Newspaper was unable to confirm its registration status, as Vision Minerals is not listed on Uganda’s public registration portal.
During a phone conversation from Western Uganda, Fazil indicated that his company has connections with key government officials in both South Sudan and Uganda that facilitate gold movement across borders via Kaya Kaya-Koboko-Arua, the Elgeu border in northern Uganda, and through Juba International Airport to Arua Airfield and then to Kampala.
Economic impact and regulatory challenges
In 2022, South Sudan earned $20.4 million from gold exports to the UAE, making it the 121st gold exporter in the world according to the Observatory of Economic Complexity.
Dr. Cosmas Pitia Kujjo, the undersecretary of the Ministry of Mining in South Sudan, notes that New Kush Ltd and Equator Gold Ltd were the first two national companies to begin gold operations in Kapoeta and Luri before the 2012 Mining Act.
Despite this progress, most mineral resources remain unexplored due to ongoing civil war, inadequate technology, limited government and private sector funding, and insufficient data on gold quality and quantity.
Dr. Cosmas cites NUCO Mining Ltd, an Australian company that awarded an exploration license but subsequently revoked it for deviating from traditional exploration methods. To support local mining, investments in national companies and partnerships with Israeli company Duar are being pursued.
According to World Bank data, South Sudan’s total reserves in 2020, including gold, amounted to over $183.6 million. Dr. Cosmas attributes the decline to a lack of transparency in gold handling and conflict between the ministry of mining and state authorities. He highlights that amendments to the 2012 Mining Act aim to regulate illegal mining activities.
“Our high export fees (18%) are discouraging gold dealers. To attract investors and reduce smuggling, we need to lower our taxes on gold, similar to other countries like DR Congo (2%), Tanzania (4%), Uganda (4-5%), and Ethiopia (7%),” Dr. Cosmas adds.
He estimates that South Sudan exports about 250-500 kg of gold annually and plans to build a gold refinery to deter illegal exports and boost the country’s gold exports.
Local conflicts and Community Issues
Dr. Cosmas also mentions that the current tax policy is unfavorable to artisanal miners and mining companies. He narrates that to address this, gold marketing centers are being established at border points, and tax discounts are being offered to exporters who officially register their gold with customs authorities.
Chief Barnaba Lotumo, a Member of Parliament for Kapoeta East County, highlights that conflicts in Greater Kapoeta are often caused by a lack of transparency.
He criticizes the eviction of locals by Asawa Mining Company Ltd without compensation, inadequate community sensitization, and the exclusion of traditional elders in agreements. The conflict with Asawa Mining Company began when the company started a road construction without informing county leaders and community members, resulting in protests and injuries to Chief Lotumo.
Lotumo calls for dialogue between mining companies and citizens to prevent future conflicts, emphasizing the need for transparency and community involvement in agreements. He points out that despite its gold resources, Kapoeta East lacks basic social services such as roads, clean drinking water, health centers, and schools. He urged locals to avoid violence and allow Asawa Mining Company to continue construction to access essential services.
Kapoeta East County commissioner Angelo Abdalla Lokeno urges the national and state governments to avoid land grabbing without compensation.
“The law is clear: any company seeking to mine or explore must first consult with the local population to reach an agreement. In this case, local authorities were not properly informed,” Lokeno concludes.
Uganda is one of the countries in the Eastern African region which is a transit route not only for South Sudan gold but also for Congo. Gold from these countries is smuggled and refined in Uganda and issued with a certificate of origin yet in actual sense it is smuggled from either Congo or South Sudan raising Uganda’s total export volumes. https://www.theeastafrican.co.ke/tea/business/uganda-spends-209m-on-gold-imports-ura-data-shows-4303806
In another report published by Global Initiative against Transitional Organized Crimes in 2019, Uganda earned more than $1.25 Billion from exports of gold transited from South Sudan and Congo to Dubai, Mumbai, and Antwerp more than double the other years
However, these figures contradict records from Emirati customs Statistics which show that between 2012 and 2022, gold exported to UAE ranges between 243 tons and 609 tons representing about 58% of UAE exports. https://www.swissinfo.ch/eng/multinational-companies/hidden-wealth-swiss-ngo-maps-africas-undeclared-gold-flows/79009684
Vision Minerals Limited, a purported Ugandan gold mining company, has previously operated in South Sudan, specifically in Nyaminye, Kala 1, and Kala 2 Rivers in Kajio Keji County, Central Equatorial State.
The company’s Chief Executive Officer, Jingo Fazil, mentioned that Vision Minerals used to work with a group of rebels and government soldiers, but ceased operations in 2016 due to escalating conflict.
Fazil noted that the price of gold sold to foreign companies varies, ranging between $50,000 and $550,000 per kilogram.
With its office based in Uganda, Vision Minerals also operates in the Democratic Republic of the Congo (DRC), Tanzania, and Zambia, and has business partners in Dubai, Canada, and Hong Kong.
Fazil stated that the company is registered in Uganda and conducts its business legally. However, the No.1 Citizen Newspaper was unable to confirm the company’s registration status as Vision Minerals is not listed on Uganda’s public registration portal.
During a phone conversation from Western Uganda, Fazil indicated that his company has connections with key government officials in both South Sudan and Uganda that facilitate the movement of gold across borders via Kaya Kaya-Koboko-Arua and the Elgeu border in northern Uganda and also through Juba International Airport to Arua Airfield and then to Kampala.
Solutions.
In 2022, South Sudan earned $20.4M from gold export to UAE making South Sudan the 121st gold exporter in the world according to the Observatory of Economic Complexity. Gold in South Sudan | The Observatory of Economic Complexity (oec. world)
Hon: Dr. Cosmas Pitia Kujjo, the Undersecretary, Ministry of Mining in the Republic of South Sudan noted that New Kush Ltd and Equator Gold Ltd were the first two national companies to begin gold operations in Kapoeta in Eastern Equatorial State and Luri in Central Equatorial State before the passing of the 2012 Mining Act.
Sadly majority of the minerals resources are unexplored due to recurrent civil war that has scared away investors, inadequate technology, limited funding from the government from the Government and the private sector, and inadequate data on the quality and quantity of gold present.
Dr. Cosmas cited NUCO Mining Ltd, an Australian Company that was awarded an exploration license however, they diverted from the concession, but to address this we are and their license was revoked by the government.
“NUCO Mining Ltd deviated from traditional exploration methods. To support local mining, we’ve invested in national companies and partnered with an Israeli company, Duar, in various regions,” he said.
According to data published by the World Bank, South Sudan’s total Reserves in 2020 gold inclusive amounted to 183,614,817 USD.
Dr. Cosmas attributed the decline to a lack of transparency in gold handling and conflict between the Ministry of Mining and state authorizes https://tradingeconomics.com/south-sudan/total-reserves-includes-gold-current-us$-wb-data.html
He however said that the current amendment of the 2012, Mining Act, will now help regulate illegal mining activities, and the central government is planning to reduce taxes and introduce customs exemption to attract foreign investors while in the long run, the government plans to construct a refinery to encourage artisanal miners to sell gold directly to the Central Bank and reduce smuggling of gold and miners been cheated.
“Our high export fees (18%) are discouraging gold dealers. To attract investors and reduce smuggling, we need to lower our taxes on gold, similar to other countries like DR Congo-2% Tanzania-4%, Uganda between 4-5%, and 7% in Ethiopia to attract investors,” added Dr. Cosmas.
Dr. Cosmas estimated that annually South Sudan exports about 250-500Kgs of gold. He noted that the government is planning to construct a gold refinery center in South Sudan this is to deter artisanal miners and smugglers from illegally exporting gold to neighboring countries and boost the country’s gold export.
https://www.eyeradio.org/south-sudan-signs-gold-contract-with-qatari-company/#:~:text=In%20March%202023%20an%20Egyptian,in%20partnership%20with%20the%20government. https://radiotamazuj.org/en/news/article/first-gold-refinery-launched-in-south-sudan.
“Our tax policy is not favoring artisanal miners and mining companies but now we are establishing gold marketing centers across the border points and also offer tax discounts for exporters who come to officially register their gold with the customs authorities” he noted.
However, Chief Barnaba Lotumo who also doubles, as Kapoeta East County, Member of Parliament in the Eastern Equatorial State government highlighted that the major cause of conflict over gold in Greater Kapoeta is caused by lack of transparency.
He blamed the recent fight between the Community of Kapoeta East and Asawa Mining Company Ltd on the forceful eviction of locals without compensation lack of community sensitization, and, a lack of involvement of traditional elders while negotiating agreements on behalf of local populations.
The conflict between Asawa Mining Company and the community members of Kapoeta East started when Asawa started constructing roads within the county without the knowledge of the county leaders and community members this resulted in some protests against the construction works and in the process of quelling the protestors Chief Lotumo was injured.
Lotumo said the only way of preventing such conflict from reoccurring in the future, both national and state governments should initiate dialogue between exploration or Mining Companies, and citizens so that communities are informed of how they can benefit from the minerals.
“The mining contracts were signed without our input. As local leaders, we demand transparency and involvement in the agreement. We need to explain the benefit-sharing to our communities.” said Lotumo.
He said Kapoeta East is one of the biggest administrative in Greater Kapoeta and despite its abundant gold, the area still lacks basic social services such as no roads, clean drinking water, Health centers, and schools.
He appealed to the locals to desist from violence and allow Asawa Mining Company to continue with the construction of roads so that they can be able to have access to other life-saving services like Health Centers.
Additionally, Kapoeta East County Commissioner, Angelo Abdalla Lokeno is calling on the national and state governments to desist from encroaching into community land forcefully and without compensating locals whose land has been occupied by mining and exploration companies.
Lokeno expressed his disappointment to the management of Asawa Mining Company for violating the resolutions of initial meeting the conducted with the County authorities where they agreed on community awareness before any exploration and construction could commence.
“The law is clear: any company seeking to mine or explore must first consult with the local population to reach an agreement. In this case, however, local authorities, including the head of security, were informed instead. Therefore, we require a new agreement with all involved companies, or they should leave the area” concluded Lokeno.
This story is made possible with the support of InfoNile.