India is truly the golden paradox. The world’s largest consumer and importer of gold — for long seemingly unbothered by all its own unexploited gold. A gold price approaching $800 is concentrating a few minds, however. India could get a gold mining industry yet. Government action is promised before next spring.
India does produce a bit of gold. Around three tons annually is the figure usually quoted. Miniscule compared to the 700-plus tonnes it consumes. Enough, you’d think to make the government notice the import bill. But up to now it hasn’t been bothered.
It is not that India has the wrong rocks. Apparently geologically it has a lot in common with Australia which is highly productive of all sorts of metals, minerals and diamonds.
The question that has been puzzling Isabel and Erin is this: why hasn’t India got the same queue of aspirational miners as other countries?
Among those giving answers is one of the few Indian mining explorers. This is Sandeep Lakhwara, director of Deccan Gold Mines. It is the country's first publicly listed gold exploration company. He is widely quoted as complaining, putting it pretty succinctly: "The whole process of application for mining activity is too complicated."
Bogged down in bureaucracy for years
When it comes to bureaucracy, Indians are experts. Permissions for exploration, prospecting and mining require negotiations with at least 20 government authorities. Getting them could take five years or more.That’s bad enough. Then, if a company does find gold it has to go through the whole process again to get permission to dig it out!
Another problem, says Lakhwara, is the expense of importing equipment. Import duties on some specialist machinery, not made in India, are over 100%.
Given Deccan Gold’s experience, change could take a while. As could the building of a whole industry! Though the Minister of State for Mines, T. Subbarami Reddy, sounds nothing if not ambitious.
"We are now committed to cut down imports and achieve self-sufficiency in the next five to six year period," he told a press conference recently. So he needs to get his skids on. Eight foreign companies from South Africa, Australia and Europe have asked for mining leases. "...and government is committed to give them full support for exploration," Reddy said.
Government now set on self-sufficiency
What is acknowledged by government is the dearth of geological data. Lack of mining and exploration activity has meant there was no interest. So there will have to be a huge amount of catching up. The right technology is not available, either, at the moment. Given the international shortage of expertise, that lack will not be made up for in a hurry.
What the government can deliver on is the promise to speed up delivery of approvals. Reddy’s edict is that approvals must be made in fourteen months. If not, then the new laws say the application goes automatically to a tribunal. Also, the new policies will allow investors who find gold to mine it without need for more negotiations. Plus leases will be transferable — another new step.
Reddy has really done his homework on the problems. He aired some common ones. There’s the failure of states and central authorities to co-ordinate. Also, difficulties, surprise surprise, over the sharing of royalties between central government and the mineral-rich states.
To show he was in earnest, Reddy referred to ambitions for India’s only producing mine. This is Hutti Gold Mines, owned by one of the mineral-rich states. It is said to have reserves of 600 tonnes. The guys have obviously been mining at their own pace. Central government is demanding it be developed more rapidly towards that self-sufficiency goal.
India has been mining gold for thousands of years — 8,000 some say. Miners were busy even in the 19th century and there are old gold workings in numerous places. There are tales of an 1880s Indian gold-rush, with over 30 companies raising money in London. In the early part of the last century there were over a hundred gold mining centres.
They’ve all gone. Until recently the only other gold producer in India used to be Bahrat Gold Mines. Exhaustion of the high grade reserves and the depth of the mines led to its closure. Now the gold price could make it an attractive proposition again.
Potential to mine 100 tonnes of gold a year
Deccan Gold is raring to go. It now has a large portfolio of exploration prospects in the states of Karnataka, Andhra Pradesh, Kerala and Rajasthan. Additionally, it has the advantage of being backed by legendry Australian prospector, Mark Creasy. He is a major shareholder and an enthusiast for India’s resources.
Creasy has noted the country’s geological similarities with Australia. He says that India has the potential to produce 100 tonnes of gold a year.
Plans at Deccan are to invest about $5 million in the next four-five years, Lakhwara told the Indian newspaper Hindu Business Line. Talks are being held with foreign investors. Up to $20 million will eventually be needed for Deccan’s prospects. The important thing is for Deccan first to move from being an explorer to a producer. Then it will have more of its own money to put in.
For sure, Deccan will not be the only gold company listed in Bombay for long. India’s economy is booming. There is plenty of money, not just for gold jewellery, but for gold stocks! And there is a very strong following for the stock market.
Keep mining!
Erin and Isabel
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