Fool’s gold: UP didn’t find gold; but top global miners could fix that

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Published: February 25, 2020 3:45:17 AM

According to Niti Aayog, even doubling the area explored to 20% of “obvious geological potential” can create an additional 5 million jobs by 2022-23, from the current 10 million.

The local mining official who briefed the press, however, omitted to give these details, and gave the impression that 3,000 tonnes was commercially extractable. (Representative image)The local mining official who briefed the press, however, omitted to give these details, and gave the impression that 3,000 tonnes was commercially extractable. (Representative image)

The story of the fiasco over Uttar Pradesh’s ‘find’ of 52,000 tonnes of gold is, by now, well known. The Geological Survey of India, it appears, had estimated that while the state did indeed have a gold reserve of that size in its Sonbhadra region, just 160 kg of this could be extracted, making it commercially unviable to extract. The local mining official who briefed the press, however, omitted to give these details, and gave the impression that 3,000 tonnes was commercially extractable. But, there’s a lesson here, and not just for the journalists who just lapped up all that they were fed without any questioning. The lesson for the government, both at the Centre as well as at the states, is that the best policy is one that makes it easy for global exploration companies to come into the country and explore. Cairn Energy’s Rajasthan block, keep in mind, was explored by global giants like Shell and thought to be a dud; yet, after Cairn bought it for $12 million and found the first 15 wells it drilled were dry, it struck gold; today, a fourth of India’s oil production comes from the Rajasthan well. And, while various government organisations found 12 kimberlites—rock formations where diamonds may be present—in the country between 1980 and 2004, Australian mining giant Rio Tinto found 22 kimberlites between 2000 and 2003, but couldn’t actually explore for diamonds as these were in the middle of a tiger reserve. And, when a government official used to go around showing people seismic maps to prove India was sitting on a sea of gas a few decades ago, few took him seriously; then, Reliance found gas in the KG Basin.

Indeed, as a Niti Aayog strategy paper on this pointed out, India’s “prospective geology is broadly similar to that of Western Australia, especially in relation to iron ore, bauxite, coal, diamonds and heavy mineral sand”, but of the area identified as rich in minerals, only 10% has been explored—the corresponding figure for Australia is 95%—and an even smaller 1.5% is presently being mined. According to Niti Aayog, even doubling the area explored to 20% of “obvious geological potential” can create an additional 5 million jobs by 2022-23, from the current 10 million. None of this is to say that UP has a great stash of gold waiting to be mined, but that we can only conclusively say that when the entire country has been fully explored and, with better technology available every day—while only two-dimensional (2D) seismic surveys were available at one time, you even have 4-D ones today, where time is the 4th dimension—the chances of success are that much better. Getting private players—both Indian and foreign—is also critical in terms of funding; the National Mineral Exploration Trust, set up a few years ago to catalyse exploration in the country has just spent Rs 200 crore of the Rs 1,500 crore it has accumulated over the past three years. Getting more firms to explore, of course, means ensuring that all necessary permissions—including the environment and forest ones—are easier to get, and that India relook its royalty regime as the royalty/levies charged by the government are amongst the highest in the world.

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