The Sudanese Mining Companies Union announced on Saturday that companies had begun procedures to halt gold production as of September 30, leading to a complete shutdown on October 1 unless the mechanism for purchasing, pricing and settling the value of gold through the Central Bank of Sudan is addressed in a “clear and binding” manner.
Objections to the purchasing and pricing mechanism
In a statement, the union said mining companies did not object to the state’s right to regulate the gold sector and collect its lawful dues, but had reservations about the mechanism currently being used to purchase and price companies’ output and settle its value.
The union rejected making producers bear the cost of distortions in the foreign-exchange market, liquidity, inflation and monetary policies, stressing that mining companies were not responsible for determining the exchange rate or managing the foreign-exchange market.
It warned that maintaining the current mechanism could reduce companies’ profit margins and threaten their ability to continue operating and meet their obligations related to wages, fuel, energy, spare parts, transport, maintenance, suppliers and financiers, as well as taxes and government fees.
Talks with the relevant authorities
The union said the companies had exhausted avenues for communication and institutional dialogue with the Central Bank of Sudan and the relevant authorities. They had held meetings with the General Intelligence Service, economic security officials and mining security authorities, and conveyed their concerns about the impact of the pricing mechanism on production and foreign-exchange flows.
The escalation comes as gold remains one of Sudan’s main sources of foreign exchange, while mining companies face higher operating costs and disruptions in the foreign-exchange and liquidity markets.
The dispute centers on how the Central Bank of Sudan purchases companies’ output, determines its value and settles their dues. The companies are calling for a mechanism they consider more consistent with gold’s economic value and production costs, while affirming the state’s right to regulate the gold trade and collect its lawful revenues.
