Govt to consider reviving KGF that has $2 bn gold reserves

British-era mines shut since 2001; ministry to decide after July

The Centre is planning to revive a cluster of gold mines at Kolar Gold Fields – shut for 15 years but with an estimated $2.1 billion worth of deposits left – as India, which is the world's second-largest importer of the metal, looks for ways to cut its trade deficit, officials said.

State-run Mineral Exploration Corp Ltd has started exploring the reserves at KGF to get a better estimate of the deposits, according to three government officials and a briefing document prepared by the mines ministry that was seen by Reuters.

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, said the officials, who are involved in the process.

India, the world's biggest gold importer behind China, spends more than $30 billion a year buying gold from abroad, making the metal its second-biggest import item after crude oil.
Balvinder Kumar, the top civil servant at the mines ministry, said getting KGF going would help the government bring down its import bill.

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. “These mines have huge potential,” Kumar said, adding that the initial estimates were conservative. “We feel there is more. The whole belt has a lot of potential in terms of untapped gold.”

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 of gold per year.

Both the Central and the state governments want to have another go at reviving the mines.
SBI Capital is looking to give an assessment for a one-time settlement of its dues, according to the document and the officials. The investment bank is expected to give its report by the end of this month. If the reports show that mining is viable, the government would seek to restructure Bharat Gold to restart mining there more efficiently, the officials said. Kumar, the top mining official, said the next step would be to seek the Union Cabinet's approval to get the project going.