India Shining yet to reflect in gold mining sector

By Manojit Saha, Project Monitor, 16-31 March 2004 :

India consumes anywhere between 600 to 700 tonnes of gold annually, worth $6-7 billion. Most of it is, however, imported since domestic production of gold is only about 2 tonnes per annum. Australia, on the other hand, produces about 280 tonnes per year. Yet, geologically, India and Australia are identical; particularly areas of Karnataka and Andhra Pradesh are very similar to that of Western Australia. Why then does India produce a mere 2 tonnes of gold?

These stunning figures were revealed by Deccan Gold Mines Ltd, the country’s first publicly listed gold exploration company, recently. Sandeep Lakhwara, Director, DGML, offers the reasons: “The whole process of application for the mining activity is too complicated. Starting from the tehsildars to SDMs to officers in the forest departments, wherever it is concerned, we have to approach each and every authority, which is very time consuming. We have to deal with at least 20 government authorities for the process of reconnaissance permit, prospecting license and mining lease. If the government can fast track the process, we can fast track implementation.”

With the company planning to gear up exploration activities, bureaucratic hurdles can prove to be a major impediment for the prosperity of the gold mining sector. Earlier, the government policy prevented companies from entering the mining sector. Now that the sector has been opened up (since 1994) procedural delays are the new stumbling blocks.

Deccan Gold Mines, which recently identified 15 prospects in the Dharwar-Shimoga RP Block, in Karnataka, containing gold mineralization, is concerned about the red tape. As a way out of this menace, Lakhwara suggested a single window-clearing agency.

Apart from Dharwar-Shimoga RP, the company has identified three other prospects – on north and south Hutti, the Mangalur RP block in Karnataka and the Ramagiri Goldfields in AP. DGML plans to undertake drilling operations in this area within the next two weeks to substantiate surface sampling and trenching results. For open pit mines, an average grade of 2-3 grams per gold would be feasible to mine whereas 6 grams per tonne of earth would generally be required for underground mining operations.

To compound the misery of gold mining prospectors, high customs duty on certain equipments, necessary for the operations, are creating further hindrance. “There is a lack of adequate ‘reverse circulation’ drilling facilities in India. Hence, the equipment has to be imported for which 120 per cent duty is imposed, which should be reconsidered,” Lahkwara adds.