By T.V. Sivanandan, The Hindu, 21 May 2003 :

GULBARGA MAY 20. The entry of the Deccan Gold Mines Ltd. (DGML) to explore the feasibility of gold mining in Hutti in Raichur has revived the prospects of gold mining in the region, which has been identified by geologists as a potential reserve of diamonds and other precious stones, besides the yellow metal.

Already, De Beers and other major companies in the diamond business have commissioned a survey to locate the areas for the exploration of diamond. This apart, reports of the DGML taking up preliminary drilling up to a depth of 300 metres, which might later extend to a depth of 700 metres, has signalled the arrival of private parties, who are keen to strike gold.

According to official sources, the Government, which opened gold and diamond mining to private operators, has identified 33,000 sq. km. of land spread over 27 blocks in Andhra Pradesh, Karnataka, Chhatisgarh, Jharkhand, Goa, and Uttar Pradesh for gold mining. At present, 35 companies are involved in the exploration of gold and precious stones.

According to reports, the DGML has invested $ 0.5 million in the exploration operation in Hutti, where the State-owned Hutti Gold Mines Ltd. (HGML) is already operating since 1947.

However, the HGML authorities, despite several surveys suggesting that the region has a good reserve of gold and precious stones, have not evolved a long-term policy for mine development and scientific mining practices for the exploration of ore.

According to official information, the broken ore available in the main underground mine in Hutti has come down from 3.69 lakh tonnes in 1996-97 to 1.13 lakh tonnes in 2000-01.

The depletion of the stock of broken ore points to the fact that the pace of mine development is poor and not commensurate with the quantity of ore hoisted every year.

The HGML did not meet the targets fixed for the actual on-lode development, which has decreased from 1,092 metres in 1996-97 to 236 metres in 2000-01. Despite considerable mechanisation, the mining of ore in the underground mine in Hutti failed to increase, although the hoisting capacity increased to 3,000 tonnes per day.

Official sources point out that despite the recommendation of the mining consultants in December 1997 to go in for extraction of high grade ore in the middle reef of the Hutti mines, which contains richer grades of ore, the HGML authorities did not take it up as they maintained that mining in the richer areas was resorted to occasionally.

Also, the company has not exploited modern methods of mining such as the large diameter blast hole (LDBH) method used in Khetri and Kolihan mines of Hindustan Copper Ltd.

The technology permits drilling of large diameter holes with 115 mm. and 57 mm. drill rods as against the 37 mm. drill rods being used now.

However, the company, which did introduce the technology in 1995, failed in harnessing it and the utilisation rate ranges from 6 per cent in 1997-98 to 25 per cent in 2000-01, according to reports.

Sources pointed out that the company had not revised the output per man shift (OMS) even after substantial mechanisation of its operation.

The LDBH was expected to deliver an OMS of 3.6 tonnes. However, the actual OMS was substantially low and varied from 0.63 tonne in 1998-99 to 0.55 tonne in 2000-01. Due to the low OMS, the cost per tonne of underground operation increased from Rs. 940.11 in 1998-97 to Rs. 1,321.48 in 2000-01.

The decision of the Government to permit private operators to take up gold mining should send a warning signal to the HGML, which has been incurring losses since 1997, with its accumulated losses adding up to Rs. 24.88 crore as on March 2001.