Last Updated : 05 May 2011 at 14:30 IST
Why India is unable to become a major gold producer
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India which holds the coveted position of being the leading consumer of gold could as well give a spirited challenge to the likes of China and South Africa in gold production provided the right policy decisions and enabling environment for gold exploration and mining is put in place.
India holds 9% of the global gold reserves estimated at 14,000 tonnes but fails to generate wealth out of it due to weak investment in exploration and mining activities.
“India was a leading gold producing country around a century ago when there were about 100 big and small gold mines in operation. Today, it produces only around 4 tonnes which is a mere 0.4% of its gold consumption. The decline of the Indian gold mining industry can be directly attributed to the nationalistic policies of Independent India, which for several decades prevented private and foreign investment in exploration and mining for gold,” Deccan Gold Mines Ltd noted in its annual report of 2010. Deccan Gold Mines is the only listed gold exploration and mining company in India.
Kolar Gold Fields in Karnataka which was operated by Bharat Gold Mines Ltd (BGML) was shut down as it turned uneconomical at lower price levels a decade ago. The Supreme Court of India has directed the Union Government to expedite floating of global tenders to revive the company. Kolar Gold Fields is considered to be world’s second deepest gold mine.
Deccan Gold Mines Ltd has alleged that “lack of investor friendly regulations and the excessive delays and attendant bureaucracy in the grant of mineral concession permits / licenses. This is further aggravated by the lack of security of tenure of mineral concession licences with the Government coming in at the last moment and reserving the areas for state-owned institutions after the private sector has spent time and effort on exploration. As a result, several of the major and junior explorers that entered India with zeal and enthusiasm have walked away from the country in the last few years.”
Deccan Gold Mines Ltd has challenged in Karnataka High Court the State Government move to reserve the North Hutti Block of Karnataka for state owned Hutti Gold Mines Company Ltd as Deccan Mines had earlier applied for prospecting licence.
China, Canada, South Africa have attracted huge private investments in gold exploration and mining sector.The per capita investment for gold exploration in India is around 12 paise whereas it is Rs 4,400 in Australia. In other words Australia is spending nearly Rs 2,640 crore whereas India is spending less than Rs 10 crore in exploration. Besides Karnataka, Andhra Pradesh, Chhattisgarh, Rajasthan, West Bengal, Jharkhand, Karnataka,Bihar and Madhya Pradesh have abundant gold reserves, according to Geological Survey of India findings.
During 2008-09, the value of gold mining production in India stood at Rs. 312 crores which is 0.99% of the total metallic mineral production in the country at Rs. 31,533.97 crores. The gold production stood at 2,464 kgs, and decreased by 17% compared to the previous year with Karnataka accounting for 99% of the total production.
-Although India’s exploration and mining developments continue to lag behind other nations, certain recent developments point to possibility of higher investment in gold exploration and mining activities. Andhra Pradesh may grant mining license to Geo Mysore India Pvt Ltd in Jonnagiri area of Anantapur district and has already obtained Central government approval in 2008.
-In Karnataka, two mining leases for gold are currently under process — one by Geo Mysore and the other by Ramgad Minerals & Mining Private Limited. In the case of Jonnagiri, it is only about giving a formal go-ahead as the AP government had already issued a letter of intent in this regard, according to the company, Business Standard reported. Geo Mysore proposes to make an initial investment of Rs 220 crore, which includes cost of processing machinery, for setting up a 1,000 tonne per day capacity facility. This is expected to produce .72 tonne gold a year. The company is hoping to make returns on investment starting from the third year of operations.
- Australian based Astra Mining Ltd may acquire one of the 12 gold mines in Karnataka, according to Jaydeep Biswas, Chief Executive Officer of Astra Mining.
Gold production is currently confined to only three mines in Karnataka, however Astra Mining Ltd is planning to expand on this by exploring the vast areas of greenstone belts in the areas that have reported gold occurrences. These include the extension areas of belts in Kolar, Hutti and Gadag, which have significant exploration data that has been collated for the next generation of gold exploration, the company said.
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