South Sudan delays gold production by a year due to conflict

JUBA, July 31 (Reuters) - South Sudan will delay the start

of gold mining by a year from its planned date in 2016, a senior

government official said on Thursday, due to fighting between

rival political groups in the world's newest country.

Andu Ezbon Adde, undersecretary for mining in the Ministry

of Petroleum and Mining, told Reuters he expected that "by 2017

our gold will enter into the world market".

South Sudan is attempting to diversify its economy away from

oil by exploiting its gold deposits. It may also have reserves

of other minerals such as copper, uranium and clay, which it

hopes to exploit with the help of investors.

The country narrowly avoided civil war when troops loyal to

sacked Vice President Riek Machar rose against the government of

President Salva Kiir in mid-December, but sporadic fighting has

continued, breaching a ceasefire agreement.

South Sudan, one of the world's least developed countries

after decades of civil war prior to seceding from Sudan in 2011,

is trying to attract international investors to develop mining.

"There are a lot of applications coming in ... not only for

gold but also copper, marble and limestone from Kapoeta (town)

for production of cement," Adde said following a meeting with

Australian government officials.

Loisa Cass, first secretary at the Australian High

Commission in Juba, said South Sudan's mining sector had

potential but required legislation to create a legal foundation.

Australia will help South Sudan develop a register that

captures data for the development of a licensing system for the

mining of the gold deposits, which would ensure transparency,

Cass said.

Revenue from oil used to make up 98 percent of the budget

until South Sudan slashed output by a third from the 350,000

barrels per day it produced before the fighting erupted.

(Reporting by Carl Odera; Editing by James Macharia and Jane

Baird)