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Gold, Oil and Revolution in North Africa

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Abstract

This chapter considers the role that gold production and trade has played in the political transformation of previously oil dependent economies of North Africa. It examines the trade in gold from two African countries, Libya and Sudan which according to the United Arab Emirates (UAE) import figures are the two largest exporters to the UAE from the African continent. Sudan which is the third largest gold producer on the African continent, reportedly exports gold to the UAE, based on 2016 prices at the lowest price of any African gold exporting country. It is argued that the economic transformation of Sudan from oil dependence to dependence on gold from small scale mining was, in no small part, the economic cause of the collapse of the al-Bashir government in 2019. Libya the other country considered, produces very little gold except in its recently discovered gold field straddling the Chadian border. Libya now lists gold as its second largest export and yet it is reported by the UAE to have exported 81 tonnes in 2016. The chapter considers the role of gold as a cause of the 2011 intervention by France in Libya as well as the role that gold trade plays in the trans-Mediterranean smuggling of refugees and economic migrants.

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Notes

  1. 1.

    See: UNCTAD. (2016). Trade Misinvoicing in primary commodities in developing countries: The case of Chile, Cote d’Ivorie, Nigeria, South Africa and Zambia. United Nations, New York and Geneva; Eunomix. (2016). A review of the UNCTAD report on trade misinvoicing, with a focus on South Africa’s gold export. Eunomix research, Johannesburg; and Eunomix. (2017). A review of the UNCTAD report on trade misinvoicing, with a full counterfactual on South African exports Final report. Eunomix research, Johannesburg.

  2. 2.

    See: Sudan’s 2014, 2016 and 2017 Article IV consultation reports.

  3. 3.

    At an international level the HS classification for unwrought gold does not differentiate between dore and bullion which are classifies at HS 7108.12 at six digit level. Some countries like the USA, for example, have created 10 digit HS classifications such as Gold doré which is HS 7108.12.1010 and HS 7108.12.1020 which is bullion.

  4. 4.

    See https://www.thomsonreuters.com/en/press-releases/2014/thomson-reuters-extends-global-gold-mine-analysis-in-eikon.html which further highlights GFMS’ range of results for mine production.

  5. 5.

    Some reports that show how prevalent smuggling is on the continent. These studies include but are not limited to: Blore, S. (2015). Contraband Gold in the Great Lakes Region. In-region Cross-border Gold Flows Versus Out-region Smuggling. Partnership Africa Canada. Downloaded on 21st May 2018 from: https://www.africaportal.org/documents/13422/Contraband_Gold_in_the_Great_Lakes_Region_1_May-2015.pdf

    And Martin, A. (Ed.s), & Taylo, B. (Ed.s). (2014). All that Glitters is not Gold: Dubai, Congo and the Illicit Trade of Conflict Minerals. Partnership Africa Canada. Downloaded on 21st May 2018 from:

    https://www.africaportal.org/documents/11760/All_That_Glitters.pdf

  6. 6.

    See: SARS. 2016. Media Statement On Unctad Report Pretoria. Friday, 29 July 2016 http://iffoadatabase.trustafrica.org/iff/sars-media-statement-on-unctad-report-29-july-2016.pdf see also, commissioned report by SARS as a result; Eunomix. (2017). A review of the UNCTAD report on trade misinvoicing, with a full counterfactual on South African exports Final report. Eunomix research, Johannesburg.

  7. 7.

    The UAE comprises of Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Quwain, and Fujairah, while the seventh emirate, Ras Al Khaimah, joined the federation in 1972. Dubai has by far the largest gold market but all other countries in the UAE are importers of gold as well.

  8. 8.

    See UN Comtrade website ‘Limitations’ http://comtrade.un.org/db/help/uReadMeFirst.aspx; United Nations. 2004. ‘International Merchandise Trade Statistics: Compilers Manual’; Ajayi, S. Ibi. Adjusting for International ‘Trade-Faking’. 1998. in ‘Trade Reform and Regional Integration in Africa.’ eds. Iqbal, Z. and Khan, S.

    https://books.google.co.za/books?id=VHjOx9aQEjQC&pg=RA1-PA98&lpg=RA1-PA98&dq=are+trade+discrepancies+caused+by+misinvoicing&source=bl&ots=GDn-hTPma0&sig=O5tcW0TQn7dqUC5FbqFhhUkGIsI&hl=en&sa=X&ved=0ahUKEwi7iMG2n_jPAhULLMAKHUceDJEQ6AEISTAI#v=onepage&q=are%20trade%20discrepancies%20caused%20by%20misinvoicing&f=false and Kar, D. 2009. Are Bilateral Trade Statistics Unreliable? Global Financial Integrity.

    http://www.gfintegrity.org/are-bilateral-trade-statistics-unreliable/ to mention a few…

  9. 9.

    The data for 2012–2015 shows a similar pattern.

  10. 10.

    See: http://www.sudantribune.com/spip.php?article65841

  11. 11.

    See: https://atlas.media.mit.edu/en/profile/country/lby/

  12. 12.

    Chamberlain, G. (Jan, 2018). The deadly African gold rush fuelled by people smugglers’ promises. The Guardian. Retrieved from: https://www.theguardian.com/global-development/2018/jan/17/deadly-african-gold-rush-people-smugglers-northern-chad-mines

  13. 13.

    See: World Gold Council reserve statistics of official gold reserves from: https://www.gold.org/data/gold-reserves

  14. 14.

    This is according to Comtrade data from 2012 to 2016. The 27 tonnes sold in 2011 is not included in this figure as it may lead to double counting, especially if lags are to be considered. The only other official importers of Libyan gold since 2011 to 2016 according to Comtrade are Italy and Turkey.

  15. 15.

    See: Gethin Chamberlain. (Jan, 2018). The deadly African gold rush fuelled by people smugglers’ promises... The Guardian https://www.theguardian.com/global-development/2018/jan/17/deadly-african-gold-rush-people-smugglers-northern-chad-mines

  16. 16.

    See: http://raregoldnuggets.com/?p=1941 and Tubiana and Gramizzi. 2017. ‘Tubu trouble: state and statelessness in the Chad-Sudan-Libya triangle.’…

  17. 17.

    See: Tubiana, Jérôme, and Gramizzi, Claudio. 2017. ‘Tubu trouble: state and statelessness in the Chad-Sudan-Libya triangle.’ Small Arms Survey HSBA Working Paper 43.

  18. 18.

    See: Gethin Chamberlain. (Jan, 2018). The deadly African gold rush fueled by people smugglers’ promises... The Guardian. Retrieved from: https://www.theguardian.com/global-development/2018/jan/17/deadly-african-gold-rush-people-smugglers-northern-chad-mines and Ben Rissler. (2016). U.N. Panel of Experts Reveals Gold Smuggling and Cluster Bombs in Darfur. Retrieved from: https://reliefweb.int/report/sudan/un-panel-experts-reveals-gold-smuggling-and-cluster-bombs-darfur

  19. 19.

    The gold was part of the previous accumulation by Gaddafi. See: Hillary Clinton Email Archive: FRANCE’S CLIENT & QADDAFI’S GOLD. Retrieved from: http://archive.is/pBkCO#selection-1097.0-1097.32 downloaded September 2018. It is understood that the adviser to which Hillary Clinton refers

  20. 20.

    Aideyan O., (2016) Political and Institutional Prerequisites for Monetary Union: Assessing Progress in the Economic Community of West African States (ECOWAS) Politics & Policy, Volume 44, No. 6, pp. 1192–1212. See also Durevall D., (2011) East African Community: Pre-conditions for an Effective Monetary Union, Working paper

    520, Department of Economics, University of Gothenburg. https://core.ac.uk/download/pdf/16332300.pdf downloaded July 2019

  21. 21.

    See: Jarry, E. (March 2018). France’s Sarkozy to face trial for influence peddling. Reuters. Retrieved from:

    https://www.reuters.com/article/us-france-sarkozy/frances-sarkozy-to-face-trial-for-influence-peddling-idUSKBN1H524P on Sarkozy indictment

  22. 22.

    See: United Nations Security Council. (2017). Letter dated 1 June 2017 from the Panel of Experts on Libya established pursuant to resolution 1973 (2011) addressed to the President of the Security Council. S/2017/466

  23. 23.

    See: https://www.youshouldbuygold.com/end-of-african-gold-standard-the-oil-gold-relationship/ and https://www.reuters.com/article/withdraw-currency-libya/libyan-central-bank-starts-withdrawing-old-currency-idUSL6E8CD43320120113 for a glimpse into the Libyan gold coin dinar. For a glimpse in regards to the ‘off-loading’ of the gold coins which may have started before the ‘revolution’ and was exasperated by the revolution, see: https://www.wsj.com/articles/libyas-central-bank-needs-money-stashed-in-a-safe-problem-is-officials-dont-have-the-code-1463153910 and https://www.reuters.com/article/withdraw-currency-libya/libyan-central-bank-starts-withdrawing-old-currency-idUSL6E8CD43320120113

  24. 24.

    See: Tsvetana Paraskova. (July 19, 2018). Sudan, South Sudan Deploy Joint Forces To Protect Oil Fields. Oiilprice.com. Retrieved from: https://oilprice.com/Latest-Energy-News/World-News/Sudan-South-Sudan-Deploy-Joint-Forces-To-Protect-Oil-Fields.html

  25. 25.

    See: Douglas H. Johnson (2012) The Heglig oil dispute between Sudan and South Sudan, Journal of Eastern African Studies, 6:3, 561–569, DOI: 10.1080/17531055.2012.696910; and Aaron Brooks. (June 8, 2018) Sudan and South Sudan strike deal to repair damaged oil fields. The East Africa Monitor. Retrieved from: https://eastafricamonitor.com/sudan-and-south-sudan-strike-deal-to-repair-damaged-oil-fields/

  26. 26.

    See: https://nai.uu.se/news/articles/2013/06/11/133944/

  27. 27.

    Source IMF Article IV consultations: SUDAN 2007 ARTICLE IV CONSULTATION, page 25 (Years 2004–2006). NB: it should however, be noted that for total revenue and expenditure more recent figures from the 2009–2010 report were used for 2006; SUDAN 2009–10 ARTICLE IV CONSULTATION, pages 17 & 19 (Years 2006–2007); SUDAN 2012 ARTICLE IV CONSULTATION, page 30 (Years 2008–2010); SUDAN 2014 ARTICLE IV CONSULTATION, page 30 & 37 (Years 2011–2012).

  28. 28.

    The trebling of bread prices in December 2018 along with collapse of the Sudanese pound which fell from 40 to the US dollar to 76 is what triggered the mass demonstrations in December which lead to the eventual collapse of the al-Bashir government and his imprisonment in April 2019. See BBC News 11th April 2019 m ‘Omar al-Bashir ousted: How Sudan got here’ https://www.bbc.com/news/world-africa-47892742 downloaded July 2019

  29. 29.

    See: https://www.dabangasudan.org/en/all-news/article/sudanese-company-70-000-miners-in-south-darfur

  30. 30.

    Ibid.

  31. 31.

    See: Dr. Mohamed Abu Fatima. (2017). Sudan Minerals Potential and Investment Opportunities. The Ministry of Sudan. Downloaded 2018 from: https://www.developingmarkets.com/sites/default/files/1.Ministry%20of%20Minerals.pdf Page. 10

  32. 32.

    Tribune. (2018, 23 April). Sudan produces 36.5 tonnes of gold in first quarter 2018. Sudan Tribune. Retrieved 2018 from: http://www.sudantribune.com/spip.php?article65251

  33. 33.

    See: https://www.dabangasudan.org/en/all-news/article/sudanese-company-70-000-miners-in-south-darfur

  34. 34.

    See: Dr. Mohamed Abu Fatima. (2017). Sudan Minerals Potential and Investment Opportunities. The Ministry of Sudan. Downloaded 2018 from: https://www.developingmarkets.com/sites/default/files/1.Ministry%20of%20Minerals.pdf

  35. 35.

    See: Alex Benkenstein. (2012). Artisanal and Small-scale Mining in Africa: Opportunities and Challenges. SAIIA. Retrieved from: https://www.saiia.org.za/research/artisanal-and-small-scale-mining-in-africa-opportunities-and-challenges/; and UNEP (2013). Global Mercury Assessment 2013: Sources, Emissions, Releases and Environmental Transport. UNEP Chemicals Branch, Geneva, Switzerland https://www.zaragoza.es/contenidos/medioambiente/onu/942-eng.pdf

  36. 36.

    The USGS explained the differences between various estimates in the following way. The Mineral industry

    of Sudan By Mowafa Taib in 2014 Minerals Year Book—Sudan (published December 2017) https://minerals.usgs.gov/minerals/pubs/country/2014/myb3-2014-su.pdfdownloaded 21st August 2018

    ‘According to the Central Bank of Sudan’s latest statistics, the country produced 73,300 kilograms (kg) of gold in 2014 compared with 70,000 kg in 2013. Gold mining companies were responsible for 9720 kg of the output in 2014 compared with 5800 kg in 2013. Artisanal miners produced 63,655 kg of gold in 2014. The Government projected that gold production would increase to 80,000 kg in 2015 and 100,000 kg in 2016. Thomson Reuters GFMS Gold Survey estimated that mined gold production in Sudan in 2014 was 20,500 kg, which was much less than government estimates. The difference appeared to be related to the inclusion of gold produced by artisanal miners in the Government estimates. Artisanal miners, who accounted for most of Sudan’s gold production, were required to sell their gold production directly to the Central Bank of Sudan, which in turn transferred it to the country’s gold refinery at Khartoum. Most of the gold produced by artisanal miners in Sudan was thought to be smuggled out of the country and consequently was not accounted for in the GFMS Gold Survey.’

  37. 37.

    Onour I. (Jan 2018) The Cost of Mismanagement of Gold Production in Sudan’ MPRA paper https://mpra.ub.uni-muenchen.de/83921/downloaded August 2018. Onur estimates 2016 gold production from the ASGM sector at 42.1 tonnes in 2016. Adding the 15.9 tonnes estimate by GFMS of gold production for listed companies the level of production is still far short of the official 94.3 tonnes government estimate. Onur estimates are far lower than recorded 2016 UAE imports of 62 tonnes in 2016.

  38. 38.

    See: http://www.en.khartoumcenter.com/sudan-restricts-gold-trade-to-central-bank/

  39. 39.

    IMF (2014). Sudan 2014 Article IV Consultation and Second Review under Staff-Monitored Program—Staff Report; Press Releases; and Statement by the Executive Director for Sudan. International Monetary Fund. Washington, D.C. https://www.imf.org/external/pubs/ft/scr/2014/cr14364.pdfDownloaded August 2018

  40. 40.

    Onour I. op cit.

  41. 41.

    See: Alex Benkenstein. (2012). ‘Artisanal and Small-scale Mining in Africa: Opportunities and Challenges’. SAIIA; and UNEP. (2013). ‘Global Mercury Assessment 2013: Sources, Emissions, Releases and Environmental Transport.’

  42. 42.

    See: Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF). (2018). Women in Artisanal and Small-Scale Mining: Challenges and opportunities for greater participation. Winnipeg: IISD; Buss Doris, Blair Rutherford, Jennifer Hinton, Jennifer Stewart, Joanne Lebert, Gisèle Eva Côté, Abby Sebina-Zziwa, Richard Kibombo, and Fredrick Kisekka Ntale. 2017. ‘Gender and Artisanal and Small-Scale Mining in Central and East Africa: Barriers and Benefits’. GrOW Working Paper Series GWP-2017-02 and Hinton, J., M. Veiga and C. Beinhoff. (2003). Women and artisanal mining: Gender roles and the road ahead, in Gavin Hilson (ed) Socio-Economic Impacts of Artisanal and Small-scale Mining in Developing Countries, Lisse: A.A. Balkema Publishers, pp. 161–204. Just to list a few.

  43. 43.

    At a subsequent point in the report the IMF states that (.pp. 17–18) ‘In 2012, it is estimated that around 48 tonnes of gold was exported, worth $2.2 billion, with only a small percentage coming from established gold mining companies. Attempts have been made to better regulate the gold sector by requiring all gold exports, other than by the large mining companies, to be through the Central Bank of Sudan. The Central Bank buys the gold from 4 gold agents who are licensed to buy gold from the small miners and sell it to the Central Bank. The Central Bank introduced these arrangements in 2011 for the purposes of controlling foreign currency reserves and also as a mechanism to reduce the incentive for smuggling by offering small miners a price which is better than the price they would obtain for smuggled gold…….The gold agents deduct a royalty of 7 percent from the payments to the small miners, so that some taxes are being collected, at least indirectly, from the miners. Royalties are paid to the Geological Research Authority of Sudan, which is a public corporation attached to the Ministry of Minerals’. See: IMF (2013) Country Report No. 13/320 Sudan: Selected Issues, p.13 https://www.imf.org/external/pubs/ft/scr/2013/cr13320.pdfdownloaded 19th September 2018.

  44. 44.

    Counterfactuals were based on author’s calculations. It was assumed that all production was exported. This saw gold sales exceed what was reported as exports (‘of which: gold’) from IMF consultation reports. The difference was then added to the actual exports, while imports remained unchanged. The difference between the counterfactual exports and imports giving the counterfactual trade balance. The royalties and company tax counterfactual on the other hand were based on the assumption that close to no revenue was generated according to IMF consultation reports. Sudan has a small number of gold mining companies who are required to pay a royalty rate of 5–7% and a business profit tax of 15% (Dr. Mohamed Abu Fatima. (2017). Sudan Minerals Potential and Investment Opportunities. The Ministry of Sudan. Downloaded 2018 from: https://www.developingmarkets.com/sites/default/files/1.Ministry%20of%20Minerals.pdf) in comparison to thousands of artisanal miners who pay close to nothing. Counterfactuals were based on author’s calculations of averages from AngloGold Ashanti (Rest of Africa—RoA), the Kinross group, Gold Fields group and Newmont of company taxes as a portion of gold sales—AngloGold Ashanti (RoA) excluded South African mines as they are marginal and disaggregated African data was readily available in comparison to the other mines where group data was used as African mine data was not disaggregated. Thereafter based on the actual values (Tax revenues and nominal GDP), the respective counterfactuals were derived.

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  1. Department of Economics, University of Namibia, Windhoek, Namibia

    Roman Grynberg & Fwasa K. Singogo

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  1. Roman Grynberg
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Grynberg, R., Singogo, F.K. (2021). Gold, Oil and Revolution in North Africa. In: African Gold. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-65995-0_6

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