MILXO, PUNTLAND , Gold mining in Milxo has drawn increasing interest from local investors, but many operations are failing to survive beyond their early years as limited financing, weak technical capacity and regulatory gaps weigh on the sector.
Interviews conducted by Puntland Times with miners, residents and people familiar with the industry suggest that about 55% of mining operations are eventually abandoned or fail. Local miners also estimate that nearly 70% of investors begin operations without adequate feasibility studies or sufficient capital to sustain prolonged exploration.
Capital Runs Out Before Gold Is Found
Ahmed Mohamed, a local miner, said investors typically enter Milxo with between $35,000 and $150,000, spending much of the money on access to mining sites, machinery, workers and initial operations.
“When they don’t find gold quickly, the money finishes and they cannot continue,” Mohamed told Puntland Times.
The experience is common, according to miners interviewed for this report. Many operators begin excavation with limited geological data and technical expertise, while keeping insufficient working capital to sustain operations if initial exploration is unsuccessful.
A Growing but Largely Informal Industry
Local sources estimate that mining and related economic activity in the area could be worth between $150 million and $300 million annually. Puntland Times could not independently verify the figures because much of the industry remains informal and comprehensive official data on gold production and trade are not publicly available.
Puntland Times contacted officials from Puntland’s Ministry of Water, Energy and Mineral Resources seeking information on regulation, supervision and support for investors. Officials contacted for this report did not respond.
Safety and Environmental Risks
The industry’s rapid growth has also brought environmental and worker-safety concerns.
A Milxo resident, who requested anonymity, said more than 30 people have died in mining-related incidents and that excavation has damaged significant areas of land. Puntland Times could not independently verify the reported death toll.
Residents say inadequate inspections and limited enforcement of safety and environmental standards have allowed some operators to leave excavated or abandoned sites without proper rehabilitation.
Untapped Economic Potential
Economists and academics familiar with the sector say Puntland could derive significantly greater economic benefits from its mineral resources if the industry were formalized and properly regulated.
One Puntland-based economic expert estimated that a developed mining sector could eventually generate more than $50 million annually in government revenue, while wider investment in mineral exploration and development could create thousands of jobs and potentially support billions of dollars in economic activity.
Realizing that potential would require geological surveys, transparent licensing, stronger environmental and occupational-safety standards, investor protections and reliable systems for recording production, exports and taxation.
A clear resource sharing and governance framework between the Puntland State and Somalia’s Federal Government would also be important, particularly on licensing authority, revenue arrangements and investor protection. Greater legal certainty could help attract investors prepared to commit substantial capital over longer periods.
Milxo illustrates both sides of Puntland’s emerging mining industry: considerable investor interest and economic potential, but also high failure rates and significant regulatory and technical challenges.
Turning that potential into a sustainable industry will depend not only on what lies beneath the ground, but on the institutions, investment and expertise built around it.