By Manasee S. Gokhale
A new legislation on mining is soon going to be in place as India plans to implement the same which is aimed to help increase the mining sector’s contribution to its economy.

The new laws will play a major part in doubling the amount contributed by the mining industry, which includes Gold mining firms – to a minimum of four percent in five years’ time. They will be devised to help cut delays in the granting of permits and eventually attract investment from abroad.

India is the largest importer of the yellow metal in the world after China and consumption of gold will always be high in this country due to its traditions and customs and age old relationship with the yellow metal. And although the import side for gold is strong, India has neglected its mining capacities. If tapped well, India could have a lot of Gold mining potential.

India is estimated to have 20,000 tonnes of gold and diamond reserves spread over several states. The Indian government has asked Geological Survey of India (GSI) to explore additional reserves of gold and diamonds in Andhra Pradesh, Karnataka, Madhya Pradesh, West Bengal, Rajasthan, Bihar and Chhattisgarh.

India has been the top importer of gold for several years and the Indian government is concerned over its over-dependence on imports for its bullion needs.

The concern increased during the recession time when prices of gold shot up beyond $1,000 per ounce in the international markets. Moreover, gold has become the safest have available for investors at present.

The government has given GSI three years to explore the possibilities to tap the gold reserves. Now, India is estimated to have 14,000 tonnes of gold and diamond reserves which should be accelerated by 20,000 tonnes in next three years.

The government has also accorded the public sector company Hindustan Copper Ltd to diversify into Gold and diamond mining in collaboration with leading foreign companies through setting up of joint ventures.

The overseas firms that are in talks with the government for gold and mining exploration include Indogold, Anglo-American Gold Mining, Monarach Gold Mining, De Beers India Ltd, ACC Rio Tinto Exploration Ltd and BHP Minerals.

The Indian government is taking all initiatives to channelise efforts in unearthing high value minerals like gold and diamonds. India imports Rs 65000 crore worth gold per annum as against Rs 75000 crore of diamond imports.

India currently produces hardly 0.4% of its gold consumption despite having 9% of global gold reserves under the country’s land mass.

The Gold story
Gold in New York opened at $933.75/934.75 an ounce and fell on the back of weak oil prices and a rising dollar. This led it to slip to an intraday low. Gold then recovered from its lows as other currencies rallied, especially Euro which rallied. Gold also rose as oil inventories were lesser than expectations.

In the rest of the session, Gold kept loyal to its high levels an traded sideways for the rest of the trading day and closed at $942.75/943.75 an ounce. 

Silver in New York opened at $13.56/13.59 an ounce. Copper and base metal prices dragged the metal to an intraday low. As Oil and Copper prices rallied, it helped the metal take back lost ground and peaking. Silver then slipped marginally off its highs and traded lightly within a small range and finally closed at $13.87/13.90 an ounce.

Manasee S. Gokhale is an economist with NCDEX, India

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