Diamond Mining Plans of De Beers, Rio Tinto Hit

Diamond Mining Plans of De Beers, Rio Tinto Hit

Jyoti Mukul / New Delhi November

22th November 2005

Jharkhand, Chhattisgarh want value addition.

The world's leading diamond mining companies, De Beers of South Africa and Rio Tinto of Australia, have hit a roadblock in their bid to get additional mining licences from Jharkhand and Chhattisgarh.

Drawing a parallel with iron ore mining, the Jharkhand and Chhattisgarh governments want these companies to add value to their operations by undertaking cutting and polishing of diamonds within the state. The state governments are granting iron ore mining rights only to those companies which add value in the state by producing steel.

Companies like De Beers are not in a position to give such an undertaking since they are not into cutting and polishing of diamonds. De Beers is only a diamond supplier and gets the cutting and polishing done through "sightholders". Cutting and polishing activity in India is confined to the Surat region in Gujarat and a few locations around Mumbai.

De Beers is seeking 12 more reconnaissance permits in Chhattisgarh, Karnataka, Jharkhand and Andhra Pradesh where initial surveys have been conducted by the Geological Survey of India.

The company already holds about 30 such permits across Karnataka, Andhra Pradesh, Chhattisgarh, Orissa, Madhya Pradesh and Uttar Pradesh, covering an area of 50,000 sq km and has invested about Rs 80 crore for conducting surveys.

Central government officials told Business Standard that the department of mines did not support the views of the states but wanted the reconnaissance permits not to be used as a tool for preempting other companies from entering diamond mining.

"We want companies should move to the next stage of mining and should not seek reconnaissance permits for areas where the Geological Survey of India has already conducted work," said an official. Diamond Trading Company, a De Beers outfit, supplies an assortment of diamonds to its clients called sightholders.