September 18, 2012 / 2:48 PM / 6 years ago

South Sudan mining law to kick-start exploration

By Alexander Dziadosz and Hereward Holland

A worker walks at the power plant of an oil processing facility at an oilfield in Unity State April 22, 2012. REUTERS/Goran Tomasevic

JUBA (Reuters) - Newly independent South Sudan plans to enact a mining law by the end of October, kick-starting exploration and development in the possibly mineral-rich but largely unexplored country, a senior official said.

South Sudan, which split from Sudan last year under a 2005 peace deal, is believed by many in the mining industry to have significant deposits of gold, copper, uranium, iron ore and other minerals, which are mostly untapped after decades of civil war with the north.

The country suspended exploration licences for about 17 companies after declaring independence, but some of those companies should be able to resume exploring immediately after the law is enacted, Deputy Minister for Petroleum and Mining Elizabeth James Bol said.

Signing the act into law will also allow South Sudan to issue new licences, a move that could eventually reduce widespread artisanal mining and bolster government revenues, she added.

“There is interest from some of the companies, especially the Australian companies, to start exploring some of the potential areas,” Bol said in an interview.

Some companies such as Epic Exploration of Australia had started exploring but their operations had been delayed until the law was passed, she said.

South Sudan is eager to diversify its economy away from oil, which it depended on for about 98 percent of state revenues. The danger of the dependency became clear when the landlocked country shut down its crude output of about 350,000 barrels per day in January in a row with Khartoum over how much it should pay to export through pipelines in the north.

South Sudan is also planning four small oil refineries to reduce its dependence on fuel imports, and expects to finish one in Melut County in Upper Nile within a year, Bol said. The refinery will process 10,000 barrels per day at first and will add another 10,000 barrels per day later.

Sudan and South Sudan reached an interim deal on oil fees last month that could open the way to resuming exports, but it still requires a border security deal before it is implemented.

If a final deal is reached this month, South Sudanese officials say they could resume some oil output by the end of the year, with full output expected to come back online midway through next year.

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