India has long been one of, if not THE, largest consumers of gold. However, with practically all of it being imported, the hit to the Indian trade balance is second only to oil. In an effort to reduce the trade deficit and encourage local industry, the Indian government is leasing out parcels containing old Victorian era gold mines, or known deposits that were never developed.
The first big step in the return of private industry to gold mining in India occurred last week with the historic first auction of a gold mine by the Indian government. The government in New Delhi plans on auctioning at least two more gold mines this year, as well as a number of base metal and mineral mines.
India is home to some of the world’s most ancient gold mines, proving that the yellow metal has been favored by the people in the Indian subcontinent for millennia. Some of these ancient gold mines, abandoned for centuries, can still be found. Many gold mining companies thrived during the British occupation of India, shipping the gold straight to London. By the early 1900s, declining yields and low prices forced them all to shut down. Today, the landscape in the old gold-bearing regions are dotted with abandoned Victorian-era mines, as well as simple, pre-colonization mines. Only one, state-run, gold mining company is still in operation.
In an effort to boost the domestic economy, the Indian government embarked on a plan to offer the mineral rights to 100 different parcels of land at auction to private firms. This is the first time since their independence from Britain that the Indian government has opened mineral exploration to private companies.
The first gold mining auction took place last week, when Indian billionaire Anil Agarwal’s Vedanta Resources emerged the winner in a grueling, 13-hour open auction that saw 160 separate bids from four competitors. The area, known as the Baghmara gold deposit in the state of Chhattisgarh, has been known to contain gold since the ancient times, but has never been properly worked. The winning bid was made on the basis of government surveys from 1981 to 1990.
One of the next gold leases will be in The Kolar Gold Fields, the site of gold mining from ancient times to the modern era. The last gold mining operation, also owned by the state, was shut down in 2001 due to rising costs. Kolar was a big gold mining area in the 1800s, after the British discovered the old, ancient mines.
This new wave of public-private mining ventures by the Modi government are aimed at revitalizing the domestic minerals and metals industries, using the technology and experience of modern mining companies. When the mines in Baghmara and Kolar start pouring gold, Indians will once again have the ability to gift native gold to loved ones and temples.
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