India’s Resource Potential: Unlocking the Mother Lode

A revamped policies to mine diamonds, gold and other precious metals, and perhaps an artisanal approach, could alter the Indian economy dramatically and take the nation to its rightful place among top global economies, predicts gold analyst Sanjiv Arole.

Ashoka the great, as a young emperor from the Maurayan dynasty, was ruthless in his quest to expand his kingdom. He also presided over one of the largest and most robust of economies in the world. However, the Kalinga war that brought death and destruction and changed Asoka into an apostle of peace as he spread the teachings of Lord Buddha far and wide. The relics of his edicts on rock, stone and iron pillars with the teachings of the Buddha are found in far off countries as well. Metallurgy was fairly advanced during his reign as India dealt in gold, silver and copper utensils, coins, etc. In fact, gold was mined in India, albeit on a small scale in the first millennia BCE. In some countries like Afghanistan, Burma, Cambodia and many other places, he is said to have exported gold mining along with his edicts, not only of Buddhist teachings but his own interpretations of how to lead life. He gave India the three lions, its national emblem. So, in spite of having gold mines and even exporting them abroad more than 2000 years ago, why is the Indian gold mining industry languishing today?

The Gondwana super-continent, around 600 million years ago, included Australia, Africa, South America, Antarctica and the Indian sub-continent. However, nearly 180 million years ago the super continent broke up and drifted to its present state. Geologically and tectonically, though the continents that have drifted away from the super continent, they exhibit similar characteristics. Precious metals and diamonds were found in abundance in South America, Australia as well as Africa. Although, their production has declined in recent times, mining in precious metals and gems continue to this day.

Geologically, India is said to be very similar to Australia and Africa, both having vast reserves of precious metals (gold, in particular) and diamonds. The regions in India that have similar geological characteristics like Australia and Africa are Karnataka, Andhra Pradesh and its surrounding regions as well as parts of central India.

Ever since independence and even before gold has been mined at the Hutti Gold Mine and the Kolar Gold Fields. However, the gold so mined has been minuscule with about 84 tonnes (other sources claim that Kolar alone produced 800 tonnes) mined over more than several decades. In fact, both the mines have been `closed’ for a number of years. Around 95% of India’s deep seated mineral resources are lying dormant in the ground.

India has around 600,000 villages, 150 million medieval farms and multiple micro climates and a huge middle class that is addicted to gold. Gold and diamonds could be the catalyst that could drive the world’s largest mining boom. So, what is holding India back?

According to a geological survey of India, the country has 23.85 million tonnes of gold ore. Several attempts have been made by successive governments to revamp the mining policy to tap the vast underground mineral resources.

The liberalisation era of the 1990s saw the mining sector being opened to the private sector and FDI too was permitted by 1994. As a result, foreign players like De Beers, Rio Tinto, etc, evinced interest in diamond mining.

As far as gold was concerned, one saw Deccan Gold Mines, Australian Resources (Geomysore), etc., put up their hand. However, mining per se is a very slow and tedious process with actual mining taking place only after the company goes through various processes like reconnaissance, exploration, excavation, prospecting. It is only after successfully going through the entire process can one apply for a mining licence.

In India, as mining is both a state and central subject, the mining companies have to go through a lot of red tape and permissions. Moreover, with changing policies and shifting tax structures, the going is very tough to actually begin commercial production.

De Beers left after being in India for several years and passing through various levels. However, even after finding several kimberlitic pipes, De Beers opted out as it could not surmount the bureaucratic and other significant hurdles.

Rio Tinto discovered the Bunder diamond deposit in 2004 in Chhatrapur district near Buxwaha. The deposit is in an ecologically sensitive area. In February 2017, Rio Tinto quit work on the project, and gave away all its assets on site to the Madhya Pradesh government.

Diamond samples from Rio Tinto’s erstwhile Bunder diamond project in Madhya Pradesh. Photo credit: Rio Tinto

In gold, a private gold mining company was slated to start commercial production in the Jonnagiri mines in Andhra Pradesh. Here, too, some bureaucratic hurdles have cropped up. The company is said to be fighting the takeover of its assets by the government.

Recently (December 2022) a news report stated that Essel Mining and Industries, a subsidiary of the Aditya Birla group, has been unable to operationalise the Bunder diamond mine, the same mine that Rio Tinto had quit. The Adyta Birla subsidiary is said to be contemplating exiting the mine à la Rio Tinto, as they face insurmountable odds in the wake of an atmosphere of terror by the Naxalites and the never-ending protests by environmentalist, apart from the regular “normal” obstacles faced by most mining companies.

The Indian mining sector, particularly gold and diamonds, is a riddle that has been too tough to crack. Even after several attempts to revamp mining policies gold and diamond mining is still floundering.

Although, the underground minerals are said to be owned by the state governments, the mining policies are made by the Union Mining Ministry. As a result, any aspiring mining company has to go through multiple layers of bureaucracy to get the requisite permissions. Therefore, we have central government bureaucrats who often formulate policies and guard them fiercely and difficult to be convinced. Then, we have the state level bureaucracy as a big stumbling block as they, in turn, safeguard the interests of the respective states. As if all that is not enough, the district level and those in the last mile can have their own interpretation of policies and take a stand. Moreover, a single-window clearance looks great on paper, but in reality, there are said to be 140 windows. It does not stop at that; politicians at all levels have a tendency to interfere in matters at all levels. Then, the left extremist elements (the Naxals and the Maoists) that happen to be active in most mining areas of India tend to block any governmental activity. The locals living off the land in remote areas then resist being ousted from their homes also block the mining activity. Since, most of the mining areas are in remote place and in deep forests or mountains, the environmentalists who take it upon themselves to be sole guardians of the ecosystem protest against almost everything. Moreover, unfortunately, almost all the players involved demand their pound of flesh before moving aside.

Miners privately aver that the toughest to convince are the environmentalists. They are not only zealots (often with the noble aim of maintaining the ecological balance of a region and anointing themselves as custodians of the environment) but quite a number of them incorruptible. Then, to compound matters, politicians of all hues often take opposing stands to further complicate matters. So, miners say that while most of those in the way of mining can be “persuaded”, the environmentalists are a stubborn lot! So, is there no way out?

It is essential to educate and make all parties involved realise what a mine can mean to a region or a country. A country like Botswana gets almost 80% of its total revenue from its joint venture Debswana with De Beers that owns the world’s biggest diamond mine Jwaneng. Therefore, diamonds, gold and other precious metals could alter Indian economy dramatically and take India to its rightful place atop global economies. At present, India faces many issues that developing nations are confronted with. Even in the 21st century, deaths due to malnutrition of children under the age of 5 in India are said to far exceed 2,000 deaths per day. There is documentary evidence to show that mines not only provide employment to many people they also positively impact the economy of the region in a 100km radius and reduce malnutrition, stunted growth and wastage among young boys and girls.

Moreover, underground mines do take care of pollution to a great extent. Then, technology in agriculture could also help the locals to get better yield from their small farmland. The need is to educate everyone about the benefits that can accrue due to farming and how to mitigate the impact of any negative issues that could crop up. This can be possible only through proper dialogue with all parties.

Now, it is pretty obvious that large mining companies have not been able to solve the Indian mining puzzle. With the deposits of gold, diamonds, etc. not too huge, the multinational mining giants with their huge overheads cannot find them feasible even though they have deep pockets. Probably, that is one of the reasons why De Beers, Rio Tinto, etc. have shut shop and left.

Miners note that what the Indian landscape requires are numerous artisanal mines or smaller mines to tap the enormous mineral resources, and follow the golden path led by Ashoka the great more than 2,000 years ago.

There are said to be at least 5 new potential mines along the 80km greenstone belt at Kolar. India requires its own El Dorado moment in precious metals and diamond mining. Not what one saw in the USA a few centuries ago or in Australia where hoards of people actually went prospecting for gold, etc. but, one could have these artisanal or smaller mines being listed on the stock exchange and funded not by big investors but by the small investors who could then improve their financial levels along with that of the mines.

It is a no-brainer that tapping of vast mineral and agricultural resources with modern scientific methods could convert India into a robust economy that is also one of the largest in the world. What is required is the political will to take everyone along and have practical solutions to problems that (specific to gold, diamonds, etc. due to their high value) can crop up. It is indeed a tall order, but someone has to set the ball rolling. Surely, it is not insurmountable. As a famous song “Saathi Haath Badhaana” says, “Come! let us all lend a hand”.



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