• States planning to auction 50 gold and diamond blocks
  • New mineral exploration policy to be released by month end

India, the source of the priceless Koh-i-Noor diamond, is looking to open up mining of gems and precious metals to cut reliance on imports under proposed new regulations.

Indian diamond cutters polish 14 of every 15 of the world’s rough gems and the country vies with China as the top consumer of gold. However, long-drawn approval processes, government red tape and land acquisition hurdles have deterred investments in exploration.

The country is set to auction about 50 blocks for diamond and gold exploration in the fiscal year started April 1, aided by the changes in the national mineral exploration policy to be unveiled by month end, Mines Secretary Balvinder Kumar said in an interview. They will be among a total of 100 blocks that also involve minerals such as iron ore, limestone, manganese and bauxite.

"We want private sector companies to invest in gold and diamonds as these are deep-seated elements and need higher investments,” Kumar said Tuesday in New Delhi. The new exploration policy will cut the time needed for approvals and guarantee royalties over the life of a mine, he said. "If they don’t find anything, we will reimburse the cost of exploration.”

Slow Permits

Rio Tinto Group has been trying to get approvals for its Bunder diamond mine since its discovery in 2004. The process is at the last stage with only the environment ministry’s nod pending and the company may get all approvals in a month or two, Kumar said.

The mines ministry has also requested the environment ministry to modify rules for exploration in forest areas and simplify the procedures for getting clearances, Kumar said. The diamond and gold prospects are mostly located in the states of Madhya Pradesh, Chhattisgarh and Jharkhand, he said. India imports almost all the gold it consumes.

"There are lots of areas having good prospects in gold and diamonds," Kumar said. "But unfortunately, we haven’t been able to explore these."

Rio’s Bunder project in Madhya Pradesh, about 500 kilometers (310 miles) southeast of New Delhi, could see the restoration of India as a major producer of diamonds. The project may be one of only four new mines to enter production in the next decade, according to Rio Tinto.

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