Sudan's al-Bashir opens large gold refinery in Khartoum

Sudan's President Omar al-Bashir (C) smiles as he looks on at the process of gold refining during the inauguration of the Sudan Gold Refinery in Khartoum, 19 September 2012 The refinery has a daily production capacity of 900kg of gold and 200kg of silver

Sudan's President Omar al-Bashir has opened the country's first gold refinery, which officials say is one of Africa's largest plants.

Analysts say it is part of a strategy by the Khartoum government to deal with the loss of oil revenue following the session of South Sudan last year.

The Sudan Gold Refinery will produce more than 328 tonnes of gold each year.

Last month, the finance ministry said the export of gold ore from Sudan would be banned once the refinery opened.

Gold smuggling

According to the Reuters news agency, Sudan hopes to sell gold worth up to $3bn (£617m) this year, double last year's gold revenue.

The country has great mining potential, but overall production figures are hard to verify because unofficial miners account for a large part of the gold industry, the agency says.

A worker holds gold pieces during the inauguration of the Sudan Gold Refinery in Khartoum on 19 September 2012 Gold from nearby nations will also be processed at the refinery, officials say

The new refinery, which will also process silver, is intended to reduce the amount of gold smuggled to other markets, such as Dubai, as producers should receive more money for higher-quality gold, it says.

"The refinery is the first project of its kind in Sudan and the second in Africa for producing and extracting gold and silver with high quality and purity," China's official Xinhua news agency quotes the director of the refinery, Mohamed Hassan Osman, as saying at the inauguration.

Another refinery director, Azhari Altayeb, said the plant would also process gold from countries in the region such as Egypt, Eritrea, Chad and the Central African Republic, reports the Sudanese Media Center, a website which has close links to the government.

South Africa's Rand Refinery, which describes itself as one of the world's largest gold refineries - processing "most of Africa's gold", has a capacity to produce 600 tonnes of gold annually.

South Sudan seceded in July 2011, taking with it three-quarters of the former country's oil production - though it relies on pipelines routed through Sudan for export.

In January, a row with Sudan over oil transit fees prompted Juba to shut down its entire oil production of 350,000 barrels a day.

The move cut government income in Sudan, forcing Khartoum to impose spending cuts. Negotiations to end the dispute are ongoing.

The BBC's James Copnall in Khartoum says Sudanese officials often state they hope gold will replace the lost oil revenues.

However economists say some of the revenue disappears into the black market - and it still does not make up for all the oil money.

But in Sudan's difficult economic climate, it is one of the sectors providing some hope, our reporter says.

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