PTI, Times of India, January 27, 2003 :

BANGALORE: Diamond Majors, De Beers and Rio Tinto will soon be setting up diamond processing facilities in Bangalore.
 
The Rio Tinto plant at White field on the outskirts of the city, “with an investment of about Rs 5 crore will be up in the next two to three months,” John Burgess of Rio Tinto said.
 
The South African Conglomerate which accounts for nearly 80 per cent of the diamond trading business in the world, will also soon come up with its plant here, a top official of the state Mines and Geology department said.
 
This development is very significant for the ministry of Mines and Geology, for it is the first such intiative taken by multinationals since government allowed private players to contribute for the mining of 13 minerals including precious ones like gold, silver and diamond, M Basappa Reddy, Director, Department of Mines and Geology (Karnataka) said.
 
In India, prior to 1994, exploration and exploitation of precious metals was reserved for state undertakings. In 1993, the Union government released 13 minerals inclusive of gold, silver, copper and zinc. And subsequently, rules were also amended, making provision for grant of reconnaissance permits, he said.
 
Reconnaissance permits have replaced prospecting licence which was there earlier. While under the prospecting licence, the maximum area to be granted was 25 sq.km, now under the reconnaissance permit, one permit can go upto 5,000 kms, Reddy said.
 
A company in one state can have a maximum of 10,000 sq km and “now we have granted so far, 13 reconnaissance permits to seven companies– De Beers and Rio-Tinto (diamond), Australian Indian Resources and Ramgarh Minerals (gold, silver and platinum group), Hutti Gold Mines, National Minerals Development Corporation and MetMin Finance.
 
Out of these seven, the first four have undertaken reconnaissance work and the results obtained by them are “very encouraging,” Reddy said.
 
At the end of two years, these companies have to reduce the area to 50 per cent of the area granted or 1,000 sq kms, whichever is less, he said, adding these companies have to submit a report every six months.
 
De Beers and Rio-Tinto were looking for kimberlite pipes for which they conducted a survey and eventually found them in Tumkur, Chitradurga, Raichur, Bellary and Gulbarga districts. So far, around Rs 4 crore has been spent by these two companies on exploration, Reddy said.
 
The quality of diamond likely to be processed at these two facilities, will be utlised for both jewellery and industry, he said.
 
“Once the plants become functional and the mining starts, the state will be earning a royalty of 10 per cent of the sale price of diamonds, which will be quite a sum. Besides, this will also lead to employment generation and infrastructure development of the those areas, where the plants being put up,” he pointed out.
 
As far as gold is concerned, the state has tremendous potential. Kolar Gold Fields (KGF) which has been closed now has totally produced 900 tonnes of gold so far while the Hutti Gold Mines is producing three tonnes per annum, Reddy said.
 
However, Karnataka’s potential according to a survey conducted is much more. The state can produce anywhere between 50 to 100 tonnes per annum, he said.
 
The results obtained by Australian Indian Resources and Ramgarh Minerals in KGF North and Maski area (in Raichur district) and Gadag area in Gadag district, are very promising. The other areas where the findings are encouraging are Tumkur and Chitradurga districts.
 
While the total consumption of gold accounts for 800 tonnes per annum, the production is only 3 tonnes per annum. And gold is also imported, which amounts to losing out on foreign exchange.
 
Hutti Gold Mines has recently been given three more reconnaissance permits. “And they are trying to tie up with some MNC for exploration,” Reddy said.
 
Karnataka can chip to a great extent and in “next couple of years we can expect world class gold deposits in Karnataka,” he added.