* Sudan boosts gold to offset loss of most oil reserves
* Sudan, Saudi Arabia to tap gold, copper in Red Sea
By Ulf Laessing
KHARTOUM, Nov 27 (Reuters) - Sudan expects to produce around 50 tonnes of gold this year, earning $2.5 billion, its mining minister said, as the country seeks to offset the loss of most oil reserves when South Sudan became independent last year.
Sudan is boosting production of gold and other minerals to gain new sources of state income and of foreign currency needed to fund imports. Output of 50 tonnes could potentially make it Africa's third largest gold miner behind South Africa and Ghana, and push it into the top 15 producers globally.
Mining Minister Kamal Abdellatif also said production at a joint project with Saudi Arabia to tap gold, silver and copper reserves in the Red Sea between the two countries would probably start in 2014.
Inside Sudan, the government has already licensed more than 85 companies to explore for gold in more than 120 locations, Abdellatif told an Arab mining conference in Khartoum on Tuesday.
Seven firms had reached the production stage so far and the number would double by the end of the year, he added.
"Till yesterday we reached 41 tonnes of gold," Abdellatif told reporters on the conference sidelines. He said that in 2013, gold production would be similar to this year's projected level of around 50 tonnes.
In 2011, Sudan earned around $1.5 billion from the export of 33.7 tonnes.
Oil used to be the main source for the budget, bringing in around $5 billion a year, until South Sudan gained independence in July 2011, taking with it three quarters of oil production although Khartoum still controls the export routes to the coast.
Unlike oil, most of the known gold reserves at the time of the Arab African country's division were in the north and, while there are gold deposits in the south, there is little data.
Sudan's gold output is small compared with players such as South Africa as Western firms have long neglected the country due to U.S. sanctions and deposits tend to be in remote places.
But with high gold prices more companies are coming. Egyptian tycoon Naguib Sawiris this year bought Canada's La Mancha Resources, which together with the government runs Sudan's biggest gold mine, Ariab Mining Co.
It is currently investing to tap deeper deposits after reserves closer to the surface have been exhausted, which explains why Sudan expects output only to stay flat next year.
Sudan also would produce around 50,000 tonnes of chrome this year, Abdellatif said.
On the Red Sea project with Saudi Arabia, now in the exploration stage, he said initial output of 3 to 4 tonnes of gold a year was possible.
"It's very rich. The deposit is more than 150, 160 tonnes of gold and more than 1 million tonnes of copper," he said.
Saudi Arabian Petroleum and Mining Minister Ali al-Naimi, who attended the conference, confirmed the cooperation. "It has already started," he said, declining to give forecasts.
Saudi firm Manafa International is the main investor in the project, for which it has formed a joint venture with Canadian company Diamond Fields International. Special drill ships will be required to extract the minerals thought to be 2,000 metres below sea level.
The government has given conflicting data on Sudan's gold production which is hard to verify as much comes from half a million artisan seekers, part of whose output is smuggled abroad. Analysts have dismissed forecasts of 70 tonnes output for 2011 made by the previous mining minister Abdelgabi Gailani Ahmed.
The central bank has tried to end smuggling of gold to major markets such as Dubai by buying up gold from local traders, even above market prices, according to industry sources.