Hutti Mines proposes to mine gold abroad

Hutti Mines proposes to mine gold abroad

Hutti Mines proposes to mine gold abroad

Hutti Gold Mines Limited (HGML), the only Indian company engaged in mining and production of gold, is likely to venture abroad to mine the yellow metal and increase its bullion production in order to tap into the lucrative gold market.

HGML, a wholly owned subsidiary of the Karnataka government, is planning to expand its gold mining activity outside of India. The company recently proposed to enter into a Joint Venture (JV) with the National Mineral Development Corporation (NMDC) to mine gold reserves outside the country. 

“While the proposal is in the preliminary stage, the JV will enable the HGML to extend technical advisory services besides taking up gold mining outside the country,” HGML managing director A K Monnappa said.

The NMDC is said to have proposed mining gold reserves in Africa, especially in Tanzania and South Africa. Tanzania is considered one of the fastest-emerging gold producers in Africa, and is now that continent’s third-largest gold-producing country after South Africa and Ghana. Its gold reserves are said to be about 36,000 tonnes.

South Africa is ranked 29th by the World Gold Council (WGC) in terms of reported official gold holdings. South Africa is said to have half of the total gold reserves in the world.

Demand and supply gap

With little increase in gold production across the world, the gap between demand and supply is set to rise. As a result, prices will shoot up. India is second only to China in terms of gold consumption. WGC figures put the consumer demand for gold in India at 204.1 tonnes for the second quarter of the 2014-15 fiscal year, while the supply in the last two quarters put together is just 364 tonnes.

According to HGML, the average price of gold has gone up from Rs 1,570 per gram in 2009-10 to Rs 2,700 per gram in 2013-14, a big jump of 70 per cent over the five-year period. Gold prices touched a peak of Rs 3,300 per gram in August 2013.

The HGML says it produces about 1.6 metric tonnes (MT) of gold a year – just 0.25 per cent of the country’s total requirements of the yellow metal. Globally, the demand for gold is estimated at over 4,800 MTs a year, whereas the production is just about 2,900 MTs.