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There has been a surge of interest in Senegal’s mining industry, though instead of the established mineral reserves it is a shiny newcomer that is generating excitement and potentially large profits.

Senegal has an active mining sector, with new projects being developed to complement already existing operations. The country is a leading producer of phosphate and has reserves estimated at more than 40m tonnes, while it is moving to increase output of its iron ore mines from 15m to 25m tonnes annually by 2011. Senegal also produces zircon, and has commercially viable deposits of tin, uranium and lithium, along with rutile, the raw material used to make titanium.

To encourage growth of the mining sector and attract overseas investment in the industry, the government has put in place a series of measures, including tax holidays for extended periods, in some cases up to 15 years, for large-scale projects. Mining companies can also enjoy Customs-free status during the development phase and unrestricted repatriation of foreign loans and remittance of dividends.

However, Senegal’s mining industry received something of a blow in July, when Arcelor Mittal, the world’s largest steel company, announced it was suspending work on its $2.2bn iron ore project in the country’s south-east due to the global economic downturn and subsequent fall in steel demand. Though the company has said it hopes to restart the development when the international economy picks up, the shelving of the scheme, even in the shorter term, will have an impact on Senegal’s own economy. The primary impact will be on job creation and infrastructure, including a new port facility and a 750-km rail line linking the mine with the maritime export terminal.

Nevertheless, while one door may be closing, albeit temporarily, a far more glittering portal seems to be opening, with Senegal on the threshold of joining the ranks of Africa’s gold producers.

In June this year, President Abdoulaye Wade attended a ceremony to formally inaugurate a mine in the south-eastern Kedougou region, a joint venture between Australian-based Mineral Deposits Limited (MDL) and the government.

To mark the event at the Sabodala mine, located some 650 km to the east of Dakar, President Wade was presented with the first bar of gold poured from ore extracted in Senegal, something the head of state described as an historic moment.

“Senegal has entered the circle of gold-producing countries with the making of the first ingot from the Sabodala mine,” said Wade.

The MDL managing director, Jeffrey Williams, told international press that with the government holding a 10% stake in the venture, putting it in line to earn a 3% royalty, there were quite a few winners from the project.

“We have a big land package in the area,” Williams said. “We’re going to exploit that in the next three to five years, and see if we can find another Sabodala.”

Even if the mining company does not find another major deposit, it could be well satisfied with what it has. On October 12, MDL announced its results for the quarter ending September 30. Despite experiencing some electrical faults and equipment blockages caused by heavy rains that slowed production activities, 54,260 ounces of gold came out of the Sabodala mine, following on from the 58,943 ounces extracted in the previous quarter.

The MDL executive chairman, Nic Limb, said the firm was delighted with how the mine has been performing.

“We remain confident that we will achieve production guidance of approximately 160,000 ounces by the end of this calendar year,” he said.

Though MDL may be ahead of the pack, having commenced extraction and processing operations, it is by no means alone in the race to uncover Senegal’s golden riches. In early November, GoldStone Resources announced it had been granted an exploration licence by the Senegalese Ministry of Mines for a block covering approximately 471 sq km and situated 60 km south-east of Tambacounda, the largest city in eastern Senegal.

Listed miner Randgold is another company active in Senegal, with the Jersey-based firm having high hopes for its Massawa field, which it believes has multimillion-ounce potential and the makings of a major orebody, with production tentatively slated to begin in 2013.

With at least half a dozen other international firms conducting exploration in Senegal or applying for licences to either carry out research or exploit identified fields, the country’s gold mining industry could have a glittering future.