Recommended Policies for Corruption Fighting and Gold Mining Reform Policies at the Northern Region
Recommended Policies for
Corruption Fighting and Gold Mining Reform Policies at
the Northern Region
Introduction:
The Northern Region, which comprises both the River Nile and the Northern States, has long been known for gold mining, and the archeological findings in the region indicated that the man of the region has been a gold-explorer since ancient times. For instance, the “Anaj” houses in Halfa, and the “Sanqir” valley west of Berber, the word has changed from the word “Shanqir,” which means “Valley of Gold” in the Anaj language, according to oral sources in Berber, where the area of this valley extends on both west and east of the Nile in the current location of Al-Abediya.
Mining activity began recently in the Northern Region in 2010, without the Federal Government been interested in taking control of such activity at the beginning because of the poor production rates, leaving the management role to local/ state authorities, which were partners in production and control of gold. Although gold mining returns were small, they have significantly boosted budgets of those authorities and helped them delivering some services to their respective citisens.
Nevertheless, after the rate of gold production started to rise in 2014, with Sudan’s production this year reaching 71 tons of gold with revenues exceeding one billion dollars. This increase coincided with the loss of oil revenues, which contributed 70% of the state budget after the separation of South Sudan; the Federal Government took control of all the operations related to gold mining and took the regional authorities out of the scene.
Official Policies on Gold Mining in the Northern Region
The political, administrative and legal directives of the authorities that came to power in Sudan, in planning and managing the gold mining sector in the Northern Region, revolves around a federal and central policy to exclude the regional levels of local government from participating in the administration and control of this vital sector, with the aim of controlling the huge financial revenues provided by this sector, in order to fill the revenue deficit that the State faced after the secession of Southern Sudan and accordingly loss of Southern-origin oil revenues, as e mentioned above.
The Federal Government oversees the gold mining sector through the Ministry of Mineral Resources, which relies on its agriculture, the Sudanese Mineral Resources Company (SMRC), which was established in the fourth quarter of 2014 and was given full control over gold mining in Sudan, which was administered by the Ministry of Minerals and the Geological Research Organization. The leadership structure of this company continued to coincide throughout the time of the former rescue regime with many security elements linked to this regime. After the December revolution, a struggle intensified over the control of its leadership among the components of the transitional authority, with the military component involved in the mining sector working to co-select its leadership. After the military coup on October 25, 2021, the company became under the control of the elements supporting the coup. Its director and senior aides, in addition to the Ministers of Finance and Mineral Resources, were among the claimants of the military coup d’état, and participants and supporters of the activities that paved the way for it.
Most of the interests and activities of the SMRC were concentrated in collecting shares of government agencies in production, despite the fact that it is not a partner in capital or operation. It deliberately neglected its role in overseeing the implementation of international standards and local laws, so that its revenues are not affected by the obstruction of production when applying these standards and laws. This caused the Sudanese economy to lose its connection, and it was affected accordingly by other economic sectors.
The Federal Government adopted a policy of empowering the leaders of the civil administration to secure their political loyalty, thorough granting them control over the sites rich in gold at the expense of other groups. This approach is clear when looking at the way in which mining companies are given endorsements. This has made gold a cause of corruption and civil conflicts in the region.
State policies on gold mining have also destroyed the environment in the Northern Region by ignoring the application of the standards governing and regulating the mining sector contained in international instruments and stipulated in national laws, and this has been aided by the absence of the oversight role of local and regional authorities, which has made the mining sites in the Region a hotbed for traders of toxic and environmentally harmful substances such as cyanide, mercury, coal and Siurya.
This is in addition to the presence of numerous mining companies owned by military and security and rapid support companies. This has led to the deployment of military and security forces in the region’s mining regions, in addition to the presence of companies that use military vehicles despite their subordination to individuals.
Production Analysis and Widespread of Cronyism
Corruption in Sudan’s gold mining sector is generally linked to centralization, a lack of transparency and accountability, as well as political bribes from local loyalists to the ruling regime.
The SMRC relies on the calculation of materials used in extraction, such as mercury, cyanide, and coal. This is based on the assumption that the state monopolizes its trade through the state-owned Sodamine Company. However, this measure is not accurate, as these materials are available outside government channels and can be obtained by companies without the knowledge of the authorities.” The director of the SMRC, Mubarak Al-Ardol, previously indicated in an interview with Al-Maidan newspaper, that this measure is useful only when measuring the production volume of concession companies, but it is not accurate when applied to traditional mining.
The method adopted by the Federal Government in calculating the production of gold in the Northern Region affects the share of the local communities in the region in the revenues of the social responsibility of companies. In this regard, residents in the River Nile State pointed out that the community responsibility set by companies at 4% does not reflect the actual volume of production, especially since the local community is absent from participation in production and control, due to the lack of a body of oversight representing citizens. It is worth mentioning that the production companies are responsible for determining the shares of community responsibility by the SMRC, which participates 30%.
This is why it is important to establish a clear database on all gold mining operations in the Northern Region, including all data and information on the volume of production, companies operating, private mining, the size and number of workers, and the need to organize and record them. This is in addition to the exit of all military and security companies from gold mining operations, transferring them to the Ministry of Finance and transforming them into public shareholding companies.
Corruption and Mining Tailings
The most important manifestations of corruption and nepotism in the gold sector in the Northern Region are the removal of Karta and its reprocessing near the residential areas. Scientific studies have proven that this Kart is saturated with toxic substances that are harmful to the environment and human health. They have pointed out that mercury, after it is separated from gold, some of its parts remain in the tailings, and therefore it may not be carried from one place to another.
The Association of Demand-Based Group revealed a laboratory study and analysis conducted by the University of Nilain, the Sudanese Environmental Protection Society and the Higher Council for the Environment, which confirmed presence of high levels of mercury in the soil of farms in villages north of Atbara and south of Berber, some of which have been turned into carcinogens. The study said that 20% of drinking water samples contained mercury, 2 out of 7 samples of citizens’ “urine”, 1 out of 14 samples of blood contained a high percentage of mercury, most of which were performed on children between the ages of 4 and 11 years. The study also pointed to the frequency of abortions among pregnant women, in addition to the death of a number of birds and livestock after drinking it from contaminated water, explaining that there are about 700 dumpsites for Karta, containing 450 thousand tons of contaminated soil, with an estimated amount of 2 tons of mercury.
Companies are accustomed to transporting and processing of Karta near residential areas, in order to avoid the high financial cost of mining in remote areas, where workers demand high wages. In addition, they are in favor of working near markets, residential areas, and from water sources, which play a major role in the extraction of gold from tailings. This is done with the knowledge of the SMRC, which is responsible for monitoring the use and spread of these highly toxic materials used in gold mining.
Another manifestation of corruption and nepotism in the field of gold mining in the Northern Region is the governmental authorities’bans villagers residing at North Atbara from moving Karta from Wadi Al-Ushar, in favor of the Huwakan Hammad Company, a Sudanese-Chinese partnership operating in this valley. This cause the people to obtain the Karta through smuggling and corruption, with the knowledge of the Sudanese Company for Mineral Resources, which monitors the valley and controls entry and exit, and obtains transit fees at the entrances.
Impact of gold mining on the social fabric and land holdings in the Northern Region
The policies of the Federal Government, which are biased towards gold mining companies in the Northern Region, have contributed to destroying the social fabric of the region through the following manifestations:
1. Bribes were offered to co-opt some elements of the civil administration and the local community, so that they would ignore infringements on the rights of the local people and communities.
2. Disputes over land between citizens and mining companies, such as the one in al-Abediya in Berber county, have erupted between local residents and some mining companies on land considered historical pastures for the local population, leading to protests and rejection by the local community.
3. The increase in educational waste in the region, due to children leaving school and going to work in gold mining. This is in addition to their exposure to physical abuse in mining sites.
4. Rise in crime rate in the region, especially drug crimes and looting.
5. The heavy foreign presence has affected the nature of the morals and values of the local community, as the policy of quick wins has overshadowed these values. It is worth noting that statistics indicate that there are more than 1,400 foreigners working in the field of gold mining in the Northern Region.
Legal Status of Gold Mining Companies in the Northern Region
Mining companies appeared in their current form when large quantities of domestic Karta accumulated during the period extending from 2010 to 2014, which encouraged relevant companies to get involved in reprocessing of such Karta. Since then the Federal Government has took their side at the expense of the traditional miners and the local communities, with the aim of getting the small producers out of the production circle and turning them into paid workers in these companies, through the then applicable laws. This is in addition to the control and spread of the fuss, terrorism, intimidation and militarization of the mining areas.
The laws of Sudan continue to grant ownership of land to the Government and reserve the right of the residents to benefit, such as the 1970 Act and the 1984 Act, which indicate that the land belongs to Allah and shall be administered by the Government for the benefit. Subsequent amendments to the laws governing land ownership in Sudan did not include any provisions for the benefit of local communities, especially the 1994 Act, which granted the President of the Republic, represented by governors of the States, absolute control over the land of Sudan.
After the Comprehensive Peace Agreement in 2005, a conflict erupted over the nature of land ownership in Sudan between the two parties to the Agreement. Where SPLM called for subordination to the local community, while the National Congress considered that ownership should be transferred to the government, and an agreement was reached to form a land commission, but this commission did not join until the secession of the south.
Mining companies have benefited from the legal status of land ownership in Sudan, where they were able to work in all the states without any legal or administrative obstacles in obtaining land to carry out their activities. On the other hand, they faced violent resistance from the people, in protest against their mining activities inside the lands that they inherited from their ancestors’ and in which they carry out their traditional activities.
The Federal Government has traditionally granted mining site endorsements to companies without obtaining approval from regional authorities, limiting the state’s role in revenue collection and diminishing the role of other government agencies in follow-up.
Some economic sources indicate that there are 140 companies involved in gold mining in Sudan, and those that produce them are between 12 and 15 companies. The production rate of these companies is about 20% of the total gold production of Sudan. The same sources indicate that there are 60 foreign companies belonging to several countries, most notably Russia, China, Canada, Europe and several Arab countries, such as Kosh, Huwakan and Tanash, the Moroccan mining company, which works in partnership with the Chinese company Ambo Sahari, the French company Pariyab and the Mancha group, which is a branch of the French company Areva, in addition to the company Myagrost, which is a subsidiary of the Russian company Kissinger in Sudan “Russian Arder Yevgeny Prigozhin, who is close to Russian President Putin and is known as the president’s chef, owns the Fangner Security Services Company, which operates in Sudan and is suspected of involvement in organizing and supporting the military coup d’état carried out by the military component on October 25, 2021.”
In the River Nile State in the Northern Region, there are more than 65 companies involved in gold mining. Of these, 23 are concessionaires, 30 are involved in the reprocessing of Karta, in addition to 12 small mining companies. Private or traditional mining, in which more than one million Sudanese workers work, constitutes 85% of the volume of Sudan’s gold production.
In May of this year, the coup government signed two contracts with the Canadian company Orca and the Australian company Persist for gold mining in the River Nile and the Red Sea states. These contracts were characterized by a lack of minimal transparency, in addition to the concealment of details from the press, thus depriving the Sudanese public opinion from getting information. The authorities did not disclose the procedures and how these companies were granted the right to concession for gold mining in Sudan, and what the terms of the contracts with these companies were, especially those related to the federal and state government quotas, the quotas of the localities, the share of the communities and the companies’ contribution to the community responsibility. Some sources reported that these contracts were concluded without the knowledge of certain relevant State institutions and without following known institutional methods, and that there was a possibility of undeclared clauses and suspicion of corruption in those contracts.
In the same context, according to SudaFax newspaper, some community leaders in the River Nile, North and Red Sea states reported that both ministries of Mineral Resources and Finance had concealed the details of such contracts, however they stood firm by their rights to know these details, and the need to include the rights of local communities in them. They warned the Ministries of Mineral and Financial Resources from following the policies of the former regime, and they pointed out that they would not allow these companies to work in those states, if their rights as communities did not include these contracts.
It is worth mentioning that most of these companies have contracts comprising numerous legal violations, and their records do not indicate where they are operating. Administrative and legal corruption extends to the Government-Owned Company of Sudamin, which is involved in partnerships with many private companies, and has already faced numerous legal cases considered by courts in Khartoum.
The situation is not different for foreign companies in terms of favoritism and overstepping the law. Although they are governed by the investment law, they are overstepping the law under the effective cover and assistance of the dissolved National Congress Party, many of whose cadres are still deep inside the Sudanese state. This is evident in the fact that these companies bring and reprocess the Karta near the Nile and the agricultural and pastoral areas, which are sometimes 200 meters or 2 kilometers away from the residential areas. The law requires reprocessing the Karta at least 35 kilometers away from residential neighborhoods and agricultural areas.
The administrative and political corruption in the field of gold mining in Sudan is manifested in the State’s disregard of the provisions of international agreements on reducing the effects of the materials used in mining, as indicated by the Global Guide for Cyanide published in 2002, the Minamata Convention on Mercury Emissions in 2013, and the Rotterdam Convention on the Import of Hazardous Chemicals in 1998. There is no compliance with safety standards when these materials arrive in Port Sudan, they enter the country randomly, and some of them enter the country through smuggling via Khartoum airport and are used in mining activities away from the control of government authorities.
In addition, Sudan has not signed a large number of international treaties on public health and the protection of workers from diseases linked to the nature of the activity. Nor has it signed the 1998 Aarhus Convention, which preserves the right of access to information and establishes controls for community participation in decision-making, including environmental aspects that must be taken into account.
Marginalization of Women in Gold Mining Sector
Despite the significant expansion of the gold sector in the Northern Region, where it has become a source of livelihood for hundreds of thousands of the region’s inhabitants, this sector is characterized by male dominance. Women do not enjoy the same opportunities as men, and their participation in less-paid activities such as selling foodstuffs around mining sites, and washing and crushing stones and other marginal activities. The marginalization and exclusion of women in gold mining is attributed to numerous social, cultural, economic, and political barriers, which include, among other things, the male dominated system in the region and the prevailing beliefs and values.
The widespread use of mercury and harmful substances in mining sites leads to the easy accumulation of such substances in the woman’s body, which leads to the harmful development of the fetus and causes congenital malformations, mental disabilities and developmental problems in the long term.
The spread of mixtures that use mercury, which according to the Sudanese Company for Mineral Resources number more than 3000, has caused the deepening of the crisis of women’s participation in the gold sector, as the cases of abortions have spread especially in the locality of Berber, which prompted the government authorities in the River Nile State to issue directives for urgent specialized tests, to investigate the reasons for the increasing rate of abortion among pregnant women.
However, despite the obstacles preventing women from participating fully in the artisanal and small-scale mining sector, women have enormous potential to achieve significant financial gains from mining, which can be addressed through the integration of gender equality issues into mining strategies, plans and policies, facilitating women’s access to mining certification, financing and mechanisms, and to all concessions that encourage their participation in investment and in the management of the gold mining sector in Sudan, as well as through the provision of alternative technologies for gold mining without mercury.
Smuggling
Despite the government’s numerous announcements to take strong measures towards fighting gold smuggling, tighten border controls and prevent exports except through the Central Bank, the huge quantities of gold smuggled confirms that the smuggling operations are carried out through official ports and airports. A comparison of the trade gap (Trade Gap) prepared by the World Integrity Organization (GFI) revealed a comparison between the volume of Sudan’s gold exports according to the central bank’s records, and the numbers indicated by Sudan’s commercial partners from countries that import gold from Sudan. This comparison revealed a huge gap, according to the Sudan Trade Digest bulletin 205,446 kilograms of gold, while importers indicated that they imported 404,732 kilograms of gold from Sudan for the same period, with a gap of 200 tons, which is equivalent to 97% of the volume of Sudan’s declared exports. The gap for the United Arab Emirates reached $4.193 billion.
Gold production in Sudan has expanded significantly in recent years, and millions of Sudanese went to work in gold mining, after the collapse of the agricultural, industrial, and commercial sectors. Many concession companies were involved in the field of carta, and Myrogold entered into production processes in 2018. The Russian presence in the gold sector in Sudan has increased, with the aim of obtaining Sudanese gold in order to face the economic sanctions imposed on it by the United States of America and Europe. All of this reasoning indicates that the quantities produced from gold, and the quantities smuggled from it, are much higher than the figures announced by the official authorities.
Many citizens of the Northern Region pointed out that the landing and take-off of aircraft at the sites of foreign mining companies are paid, which indicates that influential government agencies are involved in gold smuggling operations. They also previously seized a private plane belonging to a mining company loaded with 341 kilograms of gold bullion, despite its authorization allowing for 93 kilograms. Activists pointed out that the seizure of cast gold in the mining area of Qobqaba mine in the River Nile State indicates the presence of secret dumps belonging to the army and rapid support.
Future of Gold Mining in the Northern Region
Perhaps the most important thing that distinguishes management of the gold mining sector in the Northern Region is the clear bias of the Federal Government authorities towards companies in general and concession companies in particular, ignoring the traditional miners in the region, motivated by their undeclared objective of granting community land to these companies, and hence the exit of traditional miners and turning them into workers in these companies, so they placed everything related to gold mining in Sudan under their control.
In its press conference held in Khartoum in January 2020, the Mining Entities Consortium indicated that the crisis in the mining sector has turned from a crisis related to corruption and structure to a catastrophe stirring up racial prejudice. Was the status of the SMRC questioned? How does a company monitor companies? They said it should be transformed into an institution subordinate to the Ministry of Minerals, in addition to the need to review the structure of the mining sector in Sudan.
Most companies working in the gold mining sector in the Northern Region are companies that reprocess Karta, and they are not companies in the usual sense. Their activities do not require high operating capital, and are linked to the reprocessing of traditional mining tailings, which the government is working to dry up. This Karta is expected to dry up due to the large number of companies operating in the Northern Region. This opens the door for foreign concessionaires, which are expected to enter Sudan heavily despite the political situation Sudan is going through. National companies will not be able to keep up with it, which could lead them out of the scene similar to traditional miners. National companies will not be able to compete with companies that have huge capital estimated in millions of dollars, such as the Canadian company that has allocated 350 million dollars for investment in the mining sector, in addition to Chinese, European, Qatari, and other companies.
Recommendations
1. The Federal Government decolonizes the gold sector in the Northern Region, engages the regional government, local communities and the community in planning and control processes and in the granting of endorsements and concessions and the right to review and revoke existing licenses.
2. Commitment to transparency, financial controls, procurement and tender controls, involvement of regulatory, legislative and journalistic bodies, and inform the public about all gold-mining relevant information, including federal and state government shares, local quotas, community shares, and the contribution of concessionaire companies to local development.
3. Entirely detach and ban the military and security sector from investment in the mining sector, and, accordingly military and security companies operating in the gold sector will be transformed into civilian public shareholding companies, in which the federal and state government, communities, and workers will participate alongside the private sector.
4. Amend the Mineral Resources and Mining Development Act of 2015 to provide for the committing relevant companies and legal entities to disclose beneficial owners of their businesses, forbidding law-enforcement officials from holding shares or financial interests in any legal entity related to the gold sector, and set-up clear policies, strict controls, and deterrent laws to reduce conflicts of interest.
5. Create an investment map in the Northern Region to identify different roles and responsibilities of different concerned entities. Said map shall specify the coordinates of residential areas, agricultural projects, pastures, reserved forests, nature reserves, archeological sites, and mining sites.
6. Enact laws and regulations prohibiting reprocessing of Karta near residential areas in the Northern Region; review companies involved in this field; apply the provisions of laws and regulations thereto; oblige miners to photograph treated pools with insulation materials; dig special wells for drinking water away from production areas; and protect them from pollution.
7. Promote awareness about the risks pertaining to gold mining industry, develop local media to positively contribute in such awareness through focusing on the damages caused by the use of mining chemicals to human, animal and environmental health, and commit companies to educate local populations on the environmental risks of mining.
8. Comply with labor laws, protect women, prevent child labor, regulate their presence in mining sites, limit working hours for adults involved in heavy mining, provide safety and protection tools, and require concessionaires to train and raise the capacity of workers and communities in community monitoring, transparency and participation.
9. Strengthen the role of civil society through promotion of awareness, networking and disseminating information, involving it in risk assessment, establishing the legal and legislative framework for the gold sector, organizing demand, trade union, cooperative and social groups that protect workers’ and community rights, raising their capabilities in the field of advocacy, monitoring and community awareness, and working to create networks with their counterparts in other states.
10. Conduct scientific studies that help protect humans and the environment from mining damages, and commit to apply existing legislation on the protection of public health, safety, protection of forests, grasslands and animals, and establish deterrent penalties for violators, involving local communities in legislation and oversight.
11. Promote the participation of women and pay attention to the positive discrimination of women in all strategies, plans and policies, and facilitate their access to mining certification, financing and mechanisms, and to all privileges that encourage their participation in investment and management of the gold sector in Sudan.
12. Control the tasks and performance of Minerals and the Civil Defense Police forces in terms of stopping repression of the local residence, protecting the corrupt, providing them with the equipment that enables them to secure the mining sites, combat smuggling, protect the population and the miners, and ensure their presence in the production areas to provide prompt response to various mining-relevant emergencies that may take place.
13. Establish clear time-bound prerequisites committing gold mining companies to contribute to the development of their respective mining areas and adopts equitable employment ratios for the local population.
14. The need for political governing bodies (civil government and parliament) to monitor the compliance of executive authorities with international laws, regulations and treaties on gold mining.
15. Review and amend policies and laws related to civil mining in the Northern Region; support and develop indigenous mining through mechanisms and training; encourage it to enter into partnerships and investment cooperatives that enable it to compete and increase production; and form an advisory council for private mining.
