Deccan Gold Mines: Pioneering India’s Gold Mining Renaissance

During gold’s recent rise to record levels, Deccan Gold Mines Ltd., India’s only listed gold mining company since 2003-04, stands out as a key player. Bullion analyst Sanjiv Arole interviews Charles E. E. Devenish, a seasoned industry expert with over six decades of experience. Devenish, founder and inaugural chairman of Deccan Gold Mines, discusses the company’s mission to rejuvenate India’s gold mining industry and spark its economic growth.

It is often said that reaching the top in any field is comparatively easier than staying or maintaining that top spot. Novak Djokovic stayed atop the ATP tree for 418 weeks. However, Roger Federer held on top the top spot for 237 consecutive weeks. In a way gold too has been vying for its place atop the precious metals tree. In recent times, gold has been on a roll as it scaled new highs quite frequently indeed. Consider the following: on 28th December, 2023 gold recorded its then highest London pm fix ever at $2,078.40 per ounce. However, earlier in the month, 4th December to be precise, the yellow metal was very close to $2,150 per ounce, intra-day. Since then, gold has always remained above $2,000 per ounce levels, save for a couple of days in mid-February. Only last week, on 21st March, 2024, gold scaled its fresh all-time high of $2,210.65 per ounce, London am fix.

Historically too, gold has surpassed the rest of the precious metals ‘gang’. In 1980, gold had scaled its then all-time high of $850 per ounce. Come 2011, gold scaled a new all-time high of $1,926 per ounce in September that year. In spite of few hiccups, gold has maintained its hold on the precious metals market by recording new highs as matter of routine. Ironically, the rest of the precious metals have failed to improve their lot. In fact, at current price levels, both silver and platinum are at least 50% off their respective peak levels of $50 per ounce (1980 & 2011) and over $2,200 per ounce (2008) for platinum. Palladium is the worst hit as it now languishes at one-third its peak of $3,440 per ounce that it scaled just after the Ukraine war broke out a couple of years ago.

Normally, whenever prices of metals/minerals scale very high levels there is a resultant increase in share prices, higher income for mining companies, and dividend for shareholders. Moreover, as reserves increase in any company, there is enhanced mining activity not only to increase production in existing mines, but even explore newer mining deposits. This is a global phenomenon and occurs during a bull run in metals/mineral prices. However, India is an exception as most of the foreign mining companies have left Indian shores as they were unable to function in prevailing conditions on the ground as well as a warped mining policy. Kolar Gold Fields has long since closed down and Hutti Mines produced just 1,200 kgs of gold in 2022.

So, is all lost on the mining front for precious metals and diamonds? Is there any hope? Deccan Gold Mines Ltd. is the only listed gold mining company in the country, way back in 2003-04. Its Founder and first Chairman was Charles E. E Devenish. He is an Australian with over 60 years experience in jewellery, bullion, mining and allied fields. He is an Indophile to boot. He has been entrenched in India for around 30 years and is passionate about gold mining and mining of precious metals and diamonds to make India a top economy in world, as was the case during the reign of Samrat Ashoka over 2000 years ago.

He also brings to the table his experience in pioneering the sale of Argyle diamonds. Moreover, he was the first jeweller to market Argyle pink diamonds and pushed Argyle forward in its earlier days. Devenish firmly believes that the mining belt from Karnataka through to Andhra Pradesh (AP) is rich in minerals (gold deposits). He has reiterated time and again that 95% of India’s rich mineral resources are underground waiting to be tapped. He has devoted most of his time trying to convince successive governments and particularly the bureaucracy, for which he stayed in Delhi for 7 years to try and convince North Block. He now has hopes pinned on the Jonnagiri mines in AP to commence commercial production later in 2024. Devenish’s commitment to India cannot be questioned. He is currently Chairman of Australian Indian Resources Ltd.

Given below are Devenish’s views on various issues facing the gold mining industry in India. The answers have been culled through various talks with him on the phone, via messaging and email exchanges over time:

You have been in India for nearly thirty years now. What has kept you going for so long?

Charles Devenish: Yes, I am a bit of a dreamer but when I see what Samrat Ashoka achieved 2000 years ago for India it was truly amazing and that too without the ‘Force of Arms’. This was not a story of invasions or pillage and plunder but about a guy who developed both Mining and Agriculture knowledge to a very high degree and went out then to places like Afghanistan, Burma, Cambodia, Indonesia, etc. and built the world’s largest economy. Significantly, it was all based on gold, diamonds and spices. Moreover, the technology of the day was nothing like what we have now developed today in modern India and so we have a huge technical advantage.

Do you think it is feasible in this day and age? What would be the USP?

Charles Devenish: We also have a situation where at least 95% of India’s mineral assets are still sleeping in the ground. We have a huge population (300 million) of middle class Indians who are addicted to gold, the gambling of cricket balls being bowled, and lotteries. We then have the BSE and which could easily become the world’s largest mining gambling casino. We also have world-class technical expertise. If we put all this together with an intelligent mineral policy then India could easily economically rule the world again just like Ashoka did ages ago, but on a much larger scale.

What are the roadblocks?

Charles Devenish: My question to you is that knowing that Indians hold some 25,000 tons of physical gold, why could no governments so far, even the current PM, have not been able to tap this huge holding amongst individuals. Since most of this gold (coins, bars and jewellery) is unaccounted bullion, why have successive governments failed despite offering tax moratorium and other incentives and sops to get it all in the mainstream economy. I am mainly talking now not so much about bridal gold but bullion that has been acquired through cash transactions without tax being paid and is sitting somewhere in a vault not being used.

Do you any plan of action how to procure funds to finance gold mining in India?

Charles Devenish: Probably, the creation of a Gold Bullion Royalty Fund for India that lends physical gold for the building of gold mines is a way towards solving this vexed issue. For, with most foreign gold and diamonds mining companies having left the Indian shores, India has to fend for itself. This Gold Loan is then paid back from physical gold production of the mine. Moreover, the Royalty Fund receives back a royalty for the life of the mine and the investor gets a safe dividend each year on an asset that is now no longer dormant.

Could you please elaborate on this concept of a Gold Bullion Royalty Fund?

Charles Devenish: The ultimate beneficial business deal for India could be a Gold Fund, which mobilises India’s “Billions of Black Gold Dollars”. The concept has been in my mind now for several years and I think that if the right people put their heads together, great things could happen for India. Gold loan for mining purpose was first developed in Australia for financing proven gold resources in the ground. Gold was borrowed from the Reserve Bank of Australia, and then sold into the market and the subsequent money from the sale was used to build the mine. The repayment of the gold loan back to the Reserve Bank is then made from future gold production from the new mine. Even The Reserve Bank of Australia won as it received a small interest component of about for lending out a non-earning gold asset.

As all concerned have tried and failed to get all of the illegal Black Gold back into circulation. A more prudent approach could be the establishment of a Royalty Gold Fund that would be created from all of the legally/illegally held gold in India. The holders of such gold should be given an incentive to participate in future gold mines. Then, that gold could then in turn be mobilised to finance and develop hundreds of new Indian gold mines via a Royalty Gold Fund. For, the only way out for India is to follow the Chinese pattern of hundreds of small artisanal gold mines that could be then listed on the BSE. India could at the same time adopt the successful and well proven Australian model for Gold Loans. Australia built a very successful tax-free gold mining industry but it required a bit of creative thinking and also a bit of simple logic about understanding basic human greed.

© Deccan Gold Mines

How could it benefit India overall?

Charles Devenish: The big advantage for India will be the result of a large decrease in gold imports, as the new “Indian Black Gold” starts to circulate into the market. The single most important advantage for India will be the ability to finance hundreds of new junior startup companies that could be listed onto the B.S.E. just like Deccan Gold Mines Ltd. and at the same time help to reduce the need for gold imports. These small junior companies could then start to monopolise the Indian mining and mineral exploration space, and in so doing prevent the control of India’s mineral wealth going to large foreign mining corporates of the likes of Rio Tinto, etc.

How will this differ from the Australian model?

Charles Devenish: Australia has sold the control off its mineral assets off to the large foreign corporates. This is going to require strong political will and leadership that has a bit of vision and is prepared to take on the government entrenched bureaucracy. All we need now is for Reconnaissance Permits RPs and Prospecting Licences PLs to be reinstated for exploration and all new applications to be made online via IBM as they already have all of the existing application data.

The applications should be based on a First In Time System and to be applied for online by just using simple coordinates and an immediate non-refundable application fee payment which could be made by using a debit card. One month should be the maximum time required for an application to be fully processed.

The Gold Fund would attract a Royalty Fee for the life of the mine and in some cases may also acquire equity into the B.S.E.-listed mining company.

I welcome any bright ideas on this subject that might help to attract the interest of our illustrious leaders.

Are you still optimistic about the Indian gold mining industry?

Charles Devenish: The recent news that the Centre opposed states from levying taxes over and above royalty that too in the Supreme Court on the grounds that it would impede FDI in mining and make Indian minerals costlier and less competitive in global markets, increase trade deficit and result in skewed economic growth among states, is like a breath of fresh air in the mining of minerals in India. This gives me hope!

Finally, Devenish believes that bottom-up development should be India’s mantra and not the present top-down. His clarion call for the whole jewellery industry is to come on board, not to sit on the fence. He signs off saying, “Who knows, we may usher in a New Ashokan Age.”

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