De Beers, Riotinto to explore for gold, diamond in Karnataka soon

Bangalore, Jan 31 | Updated: Feb 1 2006, 05:30am hrs
Karnataka government would soon grand prospecting licenses (PL) to two multinational companies (MNCs) - Riotinto and De Beers - and one domestic firm - Geo Mysore Services - for diamond and gold exploration in the state. These companies, which have already completed reconnaissance survey for identifying deposits of diamond, gold and associated minerals, have submitted their application for PL, said secretary of Karnataka mines department, Mahendra Jain.

Although, about 30 domestic and international companies have preliminary reconnaissance license to explore precious metals in Karnataka, sources said leading international mining firms Riotinto, De Beers and Geo Mysore Services would receive PL very soon. The applications are being processed and the PLs would be issued in a month or two after the new government in Karnataka is formed, sources confirmed.

All these companies have applied for PL following encouraging results on their findings on gold and diamond deposits in the areas where they undertook reconnaissance survey, Mr Jain said. But, he said that none of the companies have been granted mining license yet. As the gold and diamond comes under major mineral category, the Union government should give a regulatory approval for mining, he added.

In fact, Section 11 (1) of the Mines and Minerals (Development & Regulation) Act accords a preferential right to the Reconnaissance Permit holder to move the next stage of detailed exploration under a PL. Applications by these MNCs for PLs have been made as per this section, officials said.

Without providing break-up details, officials said that these companies have sought PLs for further exploration in Dharwar, Shimoga, North and South Hutti, Bellary, Chitradurg, Merkere Gadag, Dharwad, Gulbarga and Raichur regions. However, these companies would apply for mining license only after prospecting operations, through which they could confirm whether the commercial mining would be economically viable.

Once these MNCs start mining, the state will be earning a royalty of 10% of the sale price of diamonds besides generating employments in these backward areas. As far as gold is concerned, Karnataka has high resources. The now defunct KGF gold mines had totally produced 900 tonne of gold while the Hutti Gold Mines is producing 3.5 tonne of the yellow metal per annum. A recent survey has found that Karnataka has a potential to produce 50 to 100 tonne of gold per annum.