Gold Imports Surge As Domestic Output Dips

With domestic gold production falling constantly and little progress witnessed in the new mines for which permits have been granted, India will soon have to rely entirely on imports of the yellow metal to fulfill the huge domestic demand.

Though once called the "Golden Bird", low production has today made it one of the major gold importers with 80-85 per cent imports of the commodity.

The recoverable reserves of the ore in the country according to the Indian Bureau of Mines (IBM) is 17.79 million tonne containing about 67.9 metal.

According to official figures, the country's total gold production is barely 100 tonne as compared to the total consumption of 750-800 tonne. The remaining demand of 600-650 tonne is met through imports from the Middle East and London.

 

Moreover, despite a stagnant domestic demand since the past three years and shift in consumers preference to diamonds and platinum, India's gold import has been pegged at 625-650 tonne during 2001-02 as production in the home turf falls far below demand. Moreover, a good agricultural output is expected to boost the rural demand for the precious metal.

Production in the existing gold mines is becoming unviable with high costs and low metal output. The production of Hutti Gold Mines (HGML) in Karnataka during May 2001 stood at 186.16 kg of the yellow metal as against a target of 202.66 kg.

Though Hindustan Copper Ltd produces a significant amount of the metal as a by-product, the fate of gold still remains hanging.

Official say that the cost of mining the ore works out to be around Rs 21,000 per ten grams which is not viable. "The ore content in these belts has come down drastically and mining is no longer economical. Moreover, Bharat Gold Mines is already closing down and HGML too operates at a very high cost," officials said and added that despite the granting of prospecting licenses to various mining companies, work is yet to begin.

The Centre has granted large area prospecting licenses and reconnaissance permits recently for various minerals including gold. Out of the 115 large area licenses and reconnaissance permits granted till July 31 2001, 98 have been granted for gold in Rajasthan, Andhra Pradesh, Karnataka, Uttar Pradesh, Haryana, Gujarat and Maharashtra.

"Moreover, as the commodity has already been placed under the Open General Licence (OGL), gold can easily come into the country through imports," sources added.