Fura Gems eyes Bunder diamond mine in MP as Rio Tinto exits project

A year after global miner Rio Tinto surrendered its mineral exploration licence for the Bunder project to the Madhya Pradesh government, Canada-based Fura Gems has evinced interest in acquiring the mine for diamond mining.

Founded in 2017, Fura Gems is a start-up that currently operates a ruby mine in Mozambique and an emerald mine in Colombia. The firms acquired these mines in November 2017 and January 2018, respectively, to mark its presence in the exploration of colour gemstones.

Listed on Toronto Stock Exchange, Fura Gems has already submitted its intent to the Madhya Pradesh government for commencing exploration on Bunder project.

The development assumes significance as Rio Tinto had been investing a huge sum for the past 10 years in the exploration activity of Bunder project and had even mined a sample piece of diamond on it. However, immediately before the beginning of commercial production, Rio Tinto announced its decision to exit India by surrendering its mining license of Bunder project at “zero” cost to the state government. This means the entire investment made by Rio Tinto incurred a loss. The company had paid Rs 6.4 million to the state government as royalty for exploring diamond samples on this project.

“We were eying this project for a while. That is the reason we hired the top management team of Rio Tinto’s Bunder project. We have submitted our intent to the state government to begin exploration on this site and are waiting for the government to auction the mine,” said Fura Gems President and Chief Executive Officer Dev Shetty.

Bunder project in Madhya Pradesh is the only operational diamond mine in India on which exploration is estimated to become viable. The mine has around 35 million tonnes of ore body with an estimated 1.9 million tonnes of average exploration for the next 20 years.

“A significant exploration work is done by Rio Tinto. Hence, we would commence exploration where Rio Tinto had left. We are expecting the commercial operation to begin in two years,” said Shetty.

Informed sources said that Rio Tinto was facing pressure from the government to conduct auctions of rough diamond in India. But, the company was insisting to carry rough diamond output to various auction centres outside India. The company, understandably, had argued that entire diamond output would ultimately come to India as it is the largest processors of rough diamond in the world. Every 11 out of 13 rough diamond pieces are processed in India. Thus, India has claimed its global leadership in rough diamond cutting and polishing.

To avoid a repeat of this problem, Fura Gems made its rough diamond selling policy flexible with a large portion of it to be sold directly to Indian customers. Fura Gems has set up its headquarter in Dubai to monitor its Indian and other operations in this region.

Fura Gems plans to invest $15-25 million in the next two years in addition to the cost of acquisition of Bunder project and is in talks with an Indian joint venture partner for the same.