The British crown has passed from Elizabeth II to Charles III. In a few months from now, there will be a formal coronation ceremony for which the crown Jewels will be brought out of the Tower of London. Among them is the Kohinoor diamond, still awaiting the day it will be returned to the land of its origin, India. That is a task for diplomacy.
Meanwhile, it is worth pondering why a country that produced one of the finest diamonds in history, and which was the leading producer of diamonds in the world a century ago, now has only one semi-active diamond mine. The potential, however, exists to discover many Kohinoors.
The Kohinoor, one of the largest diamonds in the world, was probably discovered in the 14th century in what is today Telangana-Andhra Pradesh. Interestingly, India was the sole producer of diamonds from the first discovery in the 2nd millennium BC until the end of the 19th century, when diamonds were discovered in Southern Africa. Today, India is only the 19th-largest producer of diamonds in the world. In fact, it imports a significant amount of diamonds annually worth around $27 billion, more than 5% of India’s total imports.
What does exist in India is a diamond-polishing hub, which re-exports processed rough diamonds worth around $25 billion. India’s annual domestic production, largely from public sector undertaking (PSU) National Mineral Development Corporation’s (NMDC) mine in Panna, Madhya Pradesh, has been less than 14,000 carats per year – it actually reported zero production in FY2022 because of an expired environment clearance – compared to 31 million carats in Russia, 10 million carats in Australia and 8 million carats in South Africa.
But the potential reserves (which can be mined economically) are already around 1 million carats, with resources (where viability still needs to be determined) measuring an additional 31 million carats. Why are we not exploring or mining these? The reasons are a mix of geology, policy and geography.
Diamonds are a form of carbon, crystallised and found in the Earth’s surface. The diamonds discovered in India until the 19th century were found in the upper alluvial surface of the Earth and were relatively easy to mine without having to dig deep. Now, their geology may be different. It is likely that any more diamonds that exist in India will be found much deeper under the surface – from 500 m to more than 1 km below the surface. Over the last 100 years, mining in India has not evolved a great deal from open-pit mining, which doesn’t go below a depth of 200-300 m, and does not require extensive investment and expensive technology.
Globally, exploration of deep-seated minerals is carried out by junior exploration companies, usually not mining companies. These companies take on the high risk of exploring several areas at considerable cost in the hope of finding one or two discoveries that they then monetise by selling to mining companies.
The auction regime introduced in India in 2015 makes it prohibitively expensive to take such risk. Therefore, currently, the only exploration taking place in India is by the two PSUs, Geological Survey of India (GSI) and the Mineral Exploration and Consultancy Limited (MECL), neither of which has the technology or finance to dig deep. If India is to find diamonds, it needs to have a separate policy for deep-seated minerals that also include gold and new-age minerals like cobalt and lithium.
Then there is the matter of geography. The last significant diamond discovery in India was in Bunder, Madhya Pradesh, by the global major Rio Tinto at the turn of the century. After a decade of spending considerable financial resources on prospecting and mining in the 2000s, the company surrendered the mines in the mid-2010s after environmental groups insisted that there was a tiger corridor in the vicinity of the mine. This fact was well-known before the lease of the mine was issued by GoI.
Instead of this uncertainty, what is needed is a clear demarcation of no-go geographies where no exploration or mining can happen. In other areas, companies can be asked to replant forests and resettle wildlife as a condition for operation, but they should not be forced to abandon projects midway.
It is well worth modifying policies and clarifying environment rules for the mining of deep-seated minerals. India’s import dependence on diamond, gold and new-age minerals is growing even when the country is known to be resource-rich. After all, it is the home of the world’s most famous diamond, just like it is also the home to the world’s first discovery of oil (in Assam in the 19th century). Let us not underestimate our resource potential.
The article was also published in The Economic Times as Making the case for mining: Here’s what India needs to do to discover more Kohinoors
About the author
Dhiraj Nayyar, the Chief Economist at Vedanata and Guest Writer at IMPRI
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