Karnataka, which has the only operational gold mine in the country, is now at the crossroads as its gold production is depleting, and the authorities have realised that not enough is being done to optimally exploit the rich gold deposits in the country.
Union Minister for Coal, Mines and Parliamentary Affairs Pralhad Joshi says, “The country has rich deposits of gold, but it is not being either explored or extracted optimally because of the costs involved. As per the geological survey, only 10 per cent of the available gold resource has been explored, and of that, only 1.5 per cent is being extracted, which is the lowest in the world. The Central Government is thinking of bringing necessary changes in its policy.”
Parliament recently cleared the Mines and Minerals (Development and Regulation) Amendment (MMDRA) Bill, 2021, to reform the mining sector and Karnataka would gain a lot if its gold mines
are revived.
Mining experts, who demand further exploration of gold, call for feasibility studies and getting statutory clearances to restart mines. As per the estimates of Mineral Exploration Corporation Ltd (MECL), every district of Karnataka has one or more gold deposits. As the State Government takes steps to expand operations at Hutti Gold Mines – the deepest and only operational gold mine in the country, experts hope that it will be back to golden days for Karnataka.
The government is looking at new gold deposits that can be mined economically. At Kolar Gold Fields, which went defunct many years ago, there is a demand for shallow extraction of the remaining gold from the mines, and also from heaps of mud deposited at the site. Ingaldal and Kappatagudda in Gadag are other likely gold mines, but extraction there would not be economical, experts say. Unlike iron ore mining, where 2-3 tonnes of ore can be extracted from 10 tonnes of mud, one can get only 0.1 gm gold from one tonne of mud.
Ingaldal in Chitradurga has no more gold deposits, while mining at Kappatagudda in Gadag district is not possible as it has been declared a wildlife sanctuary. The British mined for gold for many areas in Gadag and also achieved some initial success. But the focus shifted to KGF after rich deposits were found there. Experts point out that surging gold prices and the current account deficit on gold imports, which contributes to around 2-3 per of GDP, make it ideal for reviving gold mining in the country, and also achieve self-reliance to an extent.
Bharat Gold Mines Limited (BGML), which managed KGF, was closed in 2001, while from Hutti Gold Mines, a state government-run entity, around 2 per cent of the country’s requirements are met.
The UPA government had planned to sell the assets of defunct BGML in 2006 by floating a global tender, but it was caught in several legal tangles. Finally, the court directed the government to reconsider reopening the gold company, giving rise to hopes that KGF could be revived.
The MMDR Act empowers state-owned entities like HGML to take over the defunct BGML to restart operations. The BGML is being offered under two options: If Karnataka prefers auctioning of BGML, the Union Government has asked it to pay the company liabilities which is at `1,600 crore from the proceeds and later can divide the remaining proceeds between State and Centre; and the Union Government has also offered no objection certificate (NOC) to the State Government if they are interested in running KGF mines.
Jayakumar, president, BGML Supervisors, Officers Industrial Cooperative Societies Ltd, says JMJ Minerals Private Ltd, set by former BGML experts in 2016, had signed an Expression of Interest (EoI) with the State Government to start tail dump operations at KGF mines with an initial investment of Rs 500 crore by bringing in world-class technology, but as the state government was unable to acquire the land and parcels, the matter got delayed.
“However, changed circumstances and policies of the government have made resumption of gold extraction at KGF a reality. We continue to push the idea with the Government that the assets and rights of KGF mines need to be retained by the Government and only the Government can engage JMJ Minerals as their investment and technical partner on a contract basis as mine developer/operator or under the PPP (public-private partnership) arrangement, on an agreed profit-sharing basis,” he says.
Karnataka Mines Minister Murugesh Nirani too has announced private participation in gold production by upholding the complete rights of the company in HGML. The Union Government has principally agreed to transfer around 3,000 acres of unutilised vacant land that belongs to BGML for state-sponsored schemes to set up an industrial corridor.
Further, the Non-Ferrous Technological Development Centre, an autonomous testing lab under the Ministry of Mines, has got a big breakthrough in the tail dump extraction process and found rare earth minerals like palladium along with gold. Jayakumar says, “With the demand for gold high, the government prefers to exploit the yellow metal from KGF dumps. The government will upkeep all their property rights, including licenses under them, and will engage credible investment-cum-technical partners directly.
This arrangement will close all presumptions of selling BGML properties through auction. Our industrial cooperative has also submitted detailed feasibility reports on making use of vacant facilities at BGML, like the hospital. Other units will be used to set up operations to generate employment for local residents.” He say, “We are also closely working with the government to resolve the retired workers’ statutory dues and this can be resolved by implementing the new CPSE guidelines issued by the government. We are also initiating action to hand over the houses to beneficiaries by issuing title deeds.
If all goes well without any interruption from those impersonating as trade unions and yet urging for global tender for BGML asset sales, resumption of gold production at KGF will be a reality. This will, to some extent, ease the unemployment problem prevailing in the region.”
Giving boost to Hutti gold mines
The Hutti Gold Mines is the first Indian company to become a member of the World Gold Council and it is the deepest underground mine in the country. Mining in the government-owned Hutti Gold Mines situated in Raichur district began in 1880. It was mined by John Taylor & Sons for Hyderabad (Deccan) Company owned by Nizam of Hyderabad.
In 1956, it was renamed as Hutti Gold Mines Limited (HGML) with the formation of Mysore State. In 1985 Chitradurga Copper Company and Karnataka Copper Consortium were amalgamated with HGML.
The present depth of the mine in the 28th level is 910 metres. Total gold produced by HGML so far is about 90.61 tonnes as of April 1, 2020.
Murugesh Nirani, who visited the mines on February 26, said that he has instructed officials to prepare a detailed project report for the extension and modernisation of HGML. He also rubbished rumours of any efforts to privatise HGML.