China to help S.Sudan develop mining, in talks on development loan

Mon Sep 9, 2013 9:48am EDT

* In talks over $1-£2 bln loan for infrastructure-minister

* To conduct South Sudan's first geological survey

By Andrew Green

JUBA, Sept 9 (Reuters) - China will help South Sudan develop a mining sector and is in talks to lend it between $1 and 2 billion for road, power and agriculture projects, oil and mining minister Stephen Dhieu Dau said on Monday

Speaking at a joint news conference with the Chinese ambassador Ma Qiang, Dao said China will provide $43 million to conduct a geological study to help South Sudan's plans to hand out mining licenses in its search for gold and other metals

He gave no further details on the discussed loan.

In March, South Sudan signed a mining law to attract foreign investment but officials and mining companies say it will take time to develop the sector because of the lack of almost any infrastructure or geological surveys.

South Sudan separated from Sudan in 2011 following decades of civil war. Some officials in the new nation believe it has unexplored deposits of gold, diamonds, copper, uranium, chromite, manganese and iron ore.

"South Sudan will give Chinese companies the opportunity to invest in the Republic of South Sudan in the areas of petroleum and mining industries, and also in other economic circles," Dau said.

Under the new mining law firms can apply for a five-year exploration permit, renewable for two five-year terms, with a maximum area of 2,500 sq. km and a 25-year large-scale mining .

Qiang said in a brief statement China wanted to boost economic cooperation but did not mention the loan talks or take any questions from reporters.

"We want to enhance the friendship and the very good relationship with South Sudan...to encourage a lot of Chinese companies to join the development of South Sudan," Qiang said.

China has sought to bolster ties with South Sudan where it has significant investments in the oil industry going back to the time before the secession from Khartoum in 2011.

A Chinese official denied in March it had promised $8 billion in aid as announced by Juba last year but said more could be offered if the country achieved a lasting peace.

South Sudan's economic development depends on good relations with long time foe Sudan through which the landlocked nation needs to export its crude. Sudan dropped last week a threat to close two export pipelines in a row over alleged support for Sudanese rebels. (Reporting by Andrew Green; Writing by Ulf Laessing, editing by William Hardy)