India, another rich country insisting on being poor -- until now, maybe

New Rules to Boost
India's Gold, Diamond Output

From Reuters
via Daily Times, Lahore, Pakistan
Tuesday, July 31, 2007

http://www.dailytimes.com.pk/default.asp?page=2007%5C07%5C31%5Cstory_31-...

NEW DELHI -- Exploration of gold and diamond deposits in India will get a major boost if the federal cabinet approves a new mining policy, which aims to cut dependence on imports, officials said.

The overhaul of prospecting and mining regulations is slated to be put before ministers within a week. Government officials say that a lack of geological data and technology is blocking foreign firms from making any significant discoveries of key commodities like gold.

India's gold reserves are estimated at 14,000 tonnes but the country produces only three tonnes of its total annual demand of 800 tonnes. It imports a fifth of global output to meet the shortfall.

"Under the existing rules if any entrepreneur invests money and finds gold, then he must apply again for mining," said T Subbarami Reddy, junior mines minister, at a weekend seminar. He said that under the new policy any investor who finds gold will automatically get permission to begin mining.

Archaic laws mean firms sometimes have mining applications pending before state and federal government for up to four years before a decision is reached, said RK Sharma, secretary general of the Federation of Indian Mineral Industries. Under the new rules approvals for most minerals must be made in about a year or be automatically referred to a tribunal.

"Most of the foreign firms are interested in mining of gold, diamonds, lead, zinc, and copper," Sharma added. Foreign prospecting companies rarely come to India because they cannot sell the data they map and can utilise the information only if they venture into mining themselves.

Government officials say the new policy would also allow prospecting companies to sell their information to mining companies, whose expertise lies in digging out the metal. Indian states like Rajasthan, Karnataka, Madhya Pradesh, Bihar, and West Bengal are believed to have gold reserves, which are untapped because of a lack of investment.

Indian state-run firms are investing only about 100 million rupees ($2.5 million) annually in prospecting these resources, whereas mining powers invest about 25 billion rupees annually in locating mineral resources, excluding crude oil and gas, Reddy said.

He said the state-run Geological Suvey of India has also been asked to map additional areas for gold mining with the aim of reducing India's dependence on imports. Government officials say that better mining could cut the need for imports of rough diamonds, estimated at 750 billion rupees annually.

These diamonds are cut and polished before being exported worldwide. India produces 89 minerals, out of which 11 are metallic and 52 non-metallic. The country is estimated to have 2.92 billion tonnes of bauxite, the raw material for aluminium, or some 10 percent of world reserves. It is also estimated to have 23 billion tonnes of iron ore deposits and 276 billion tonnes of coal.

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