Government mulls reviving gold mines worth $2 billion reserves
State-run Mineral Exploration Corp Ltd has started exploring the reserves at Kolar Gold Fields in Karnataka to get a better estimate of the deposits, according to three government officials.
The government is planning to revive a cluster of colonial-era gold mines - shut for 15 years with an estimated $2.1 billion worth of deposits left.
India, the world's second-largest importer of the metal is looking for ways to cut its trade deficit, officials said.
State-run Mineral Exploration Corp Ltd has started exploring the reserves at Kolar Gold Fields in Karnataka to get a better estimate of the deposits, according to three government officials, Reuters reported.
The ministry has also appointed investment bank SBI Capital to assess the finances of the defunct state-run Bharat Gold Mines Ltd, which controls the mines, and the dues the company owes to workers and the authorities.
India spends more than $30 billion a year buying gold from abroad, making the metal its second-biggest import item after crude oil.
Initial Mineral Exploration Corp estimates show reserves worth $1.17 billion in the mines, according to the briefing document. Another $880.28 million in gold-bearing deposits is estimated left over in residual dumps from previous mining operations.
The document does not give an estimate of how much it would cost to restart the mines.
India imports 900 tonnes to 1,000 tonnes per year, but local gold output is miniscule, at 2 tonnes to 3 tonnes per year.
The Kolar fields, located about 65km (40 miles) northeast of the technology hub of Bengaluru, are among the world's deepest gold mines.
Mining was started there by John Taylor and Sons, a British engineering firm, in 1880, when Britain ruled India. The area, now mostly a ghost town, still has the colonial-era clubs, houses and even a golf course that were built for its executives.
India took over Kolar soon after independence in 1947, but struggled to profitably mine the reserves. In 2001, Bharat Gold was forced to cease operations due to mounting losses, the result of a large, unproductive workforce and dated, economically unviable methods of mining.