Reliance Industries, the country's biggest company by market capitalisation, plans to expand its plans for mining for precious metals by acquiring state prospected areas in the diamondrich state of Madhya Pradesh.
Reliance Industries, through an unnamed subsidiary, currently owns a licence to prospect for diamonds in the Rewa, Siddhi and Satna region, of the state and is looking to extend its foray in the sector which has already seen the presence of global mining majors such as Rio Tinto and De Beers, signalling a tough fight in the near future among these large players, say people familiar with RIL's plans.
A Reliance spokesperson didn't respond to queries sent by ET. The move by Reliance is backed by the sharp growth seen in precious metals with a large chunk of the diamond business slowly shifting to India and China , away from traditional markets such as Israel and Belgium. This is due to the advantages of low-cost skilled labour in India and use of modern technology.
According to Gem & Jewellery Export Promotion Council, a trade association that maintains data in the closely-held industry, India became the world's largest manufacturing centre for cut and polished diamonds in 2010, accounting for 60% of the world market by value.
Reliance Industries' plan is also in line with the government's policy initiatives. "The new mining policy will suit the entry of large companies such as Reliance Industries as they can bid for areas prospected by the government through an open tender policy," said the head of a large mining company which has interests in precious metals mining in Karnataka, Madhya Pradesh and Andhra Pradesh.
The chief executive also confirmed the interest of Reliance Industries in applying for prospecting licences in the Panna region of Madhya Pradesh. The so called Mines and Minerals (Development and Regulation) Bill which is currently being drafted to include new provisions on protecting the environment, is reported to contain new guidelines on precious metals mining.
Under the current norms, state governments grant mineral concessions such as reconnaissance permits, prospecting licences and mining leases to companies, after a final approval from the central government. The new bill seeks to contain additional provisions on forest and environment clearances which are more stringent on mining of iron ore, coal and bauxite.
The new provisions will grant companies to enter the precious metals mining by bidding for prospected areas. Such a move is typically done to ensure development of a mine where the existing company, which owns the prospecting licence, is unable to bring in additional funds required for mining. This will also allow mines that have been prospected by state agencies such as the Geological Survey of India, to be offered to interested companies through competitive bidding.
"Investments in a prospected mine is typically quite large, sometimes running into hundreds of crores," said the mining company head mentioned earlier. "This leads many companies to exit either by selling the prospecting licence to another company". Australian major Rio is reported to have applied for a diamond mining licence and is currently doing pre-feasibility exploration at Bunder near Chhattarpur in Madhya Pradesh.
This mine has been reported to have reserves of 27.4 million carats, making it one the largest diamond finds in the world. Reliance Industries' interest in diamond mining is also backed by a recent report by the Gem & Jewellery Export Promotion Council that states that eleven out of every 12 diamond jewellery sold worldwide is made in India. The council also says that India exported cut and polished diamonds worth $18.24 billion last fiscal year.
Reliance Industries, through an unnamed subsidiary, currently owns a licence to prospect for diamonds in the Rewa, Siddhi and Satna region, of the state and is looking to extend its foray in the sector which has already seen the presence of global mining majors such as Rio Tinto and De Beers, signalling a tough fight in the near future among these large players, say people familiar with RIL's plans.
A Reliance spokesperson didn't respond to queries sent by ET. The move by Reliance is backed by the sharp growth seen in precious metals with a large chunk of the diamond business slowly shifting to India and China , away from traditional markets such as Israel and Belgium. This is due to the advantages of low-cost skilled labour in India and use of modern technology.
According to Gem & Jewellery Export Promotion Council, a trade association that maintains data in the closely-held industry, India became the world's largest manufacturing centre for cut and polished diamonds in 2010, accounting for 60% of the world market by value.
Reliance Industries' plan is also in line with the government's policy initiatives. "The new mining policy will suit the entry of large companies such as Reliance Industries as they can bid for areas prospected by the government through an open tender policy," said the head of a large mining company which has interests in precious metals mining in Karnataka, Madhya Pradesh and Andhra Pradesh.
The chief executive also confirmed the interest of Reliance Industries in applying for prospecting licences in the Panna region of Madhya Pradesh. The so called Mines and Minerals (Development and Regulation) Bill which is currently being drafted to include new provisions on protecting the environment, is reported to contain new guidelines on precious metals mining.
Under the current norms, state governments grant mineral concessions such as reconnaissance permits, prospecting licences and mining leases to companies, after a final approval from the central government. The new bill seeks to contain additional provisions on forest and environment clearances which are more stringent on mining of iron ore, coal and bauxite.
The new provisions will grant companies to enter the precious metals mining by bidding for prospected areas. Such a move is typically done to ensure development of a mine where the existing company, which owns the prospecting licence, is unable to bring in additional funds required for mining. This will also allow mines that have been prospected by state agencies such as the Geological Survey of India, to be offered to interested companies through competitive bidding.
"Investments in a prospected mine is typically quite large, sometimes running into hundreds of crores," said the mining company head mentioned earlier. "This leads many companies to exit either by selling the prospecting licence to another company". Australian major Rio is reported to have applied for a diamond mining licence and is currently doing pre-feasibility exploration at Bunder near Chhattarpur in Madhya Pradesh.
This mine has been reported to have reserves of 27.4 million carats, making it one the largest diamond finds in the world. Reliance Industries' interest in diamond mining is also backed by a recent report by the Gem & Jewellery Export Promotion Council that states that eleven out of every 12 diamond jewellery sold worldwide is made in India. The council also says that India exported cut and polished diamonds worth $18.24 billion last fiscal year.
Source: www.economictimes.indiatimes.com
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