PRECIOUS SEARCH

New Delhi, April 15: Rio Tinto has applied for a mining licence for what could be the largest diamond mine in India.

The global mining giant, which is carrying out pre-feasibility exploration at the Bunder Mine project near Chhattarpur in Madhya Pradesh, believes the mine can have reserves of 27.4 million carats, making it the largest diamond find in the last 10 years in the world.

“We have applied for a mining licence from the central government … in this area where we have a prospecting licence and the ‘inferred resource’ is estimated at 27.4 million carats,” said Nik Senapati, managing director of Rio Tinto India. Rio was given the prospecting licence in 2006.

The Bunder mine is likely to hold resources seven times more than Panna, the only operating diamond mine in the country. It is estimated that the grade of the Bunder reserves is 0.7 carats per tonne.

However, it takes a long time for a mine to go onstream and the current studies are trying to establish its commercial viability.

Diamond traders in Delhi estimated the value of the roughs at $4-5 billion. However, Senapati did not comment on the valuations.

The grant of the licence to Rio may get delayed as environment activists have filed a case against the firm in Madhya Pradesh High Court. Senapati said the firm was fully compliant with all laws, including environmental norms.

The domestic diamond processing industry generates revenues of more than Rs 70,000 crore annually but is facing a shortage of 30 per cent in its requirement of roughs.

Diamond miners, including South Africa-based De Beers and Russia’s Alrosa, had cut rough diamond output three years back in the wake of the global economic crisis, which had seen demand falling.

With the economy picking up, the demand has risen and prices have gone up by about 35 per cent. Prices for roughs stand at about $150 a carat in the global markets.

In 2009, rough diamond supply stood at 124 million carats globally compared with 164 million carats in 2008.

Rio, a Reliance Industries’ subsidiary and De Beers have been prospecting for diamond in the country. The Reliance subsidiary holds a prospecting licence for about 1800 sq km spread over Rewa, Siddhi and Satna in Madhya Pradesh.

De Beers is believed to be looking for the stone at Gumla in Jharkhand, besides Orissa and Mahbubnagar in Andhra Pradesh.

Besides diamond, Rio has joined hands with Orissa Mining Corporation and NMDC to develop iron ore mines in Keonjhar and Sundergarh in Orissa.