Rajasthan to auction copper, gold mines
Other | Photo Credit: Reuters

As part of its strategy to drum up investments in the state, the Rajasthan government will shortly auction copper and gold mines.

While the state is all set to float notice inviting tender (NIT) for a copper mine in the Ajmer district, it has also identified two gold deposits—Bhukia and Dagocha—for auction.

During a coordination-cum-empowered committee meeting on 6 April, attended by the Rajasthan state government officials, India’s ministry of mines also suggested names of potential mineral blocks including copper deposits near Dausa and Dhobion in the state for auction.

“We have identified a copper block called Mohanpura Ferrakia in the Ajmer district which will be auctioned under composite licencing route,” said a Rajasthan government official requesting anonymity.

A composite licence holder conducts the geophysical exploration of the area to find out the exact reserve of the mineral and starts mining later on.

India’s total copper ore resources are estimated at around 1,558.46 million tonnes. The size of the Indian copper industry is around 500,000 tonnes, which as percentage of world copper market is only 3%. However, growth and development in the infrastructure, real estate, telecom and electrical industry is boosting copper demand. Hindustan Copper Ltd, the only miner of copper ore in India, produced 356,000 tonnes of ore in December 2015 compared with 277,000 tonnes during the same period last year.

According to experts, domestic consumption of copper is on the rise creating a lot of interest among miners for auction of new mines.

“Due to low labour and electricity costs, certainly there would be interest among investors, but that will finally depend on the quality and quantity of ore,” said Dipesh Dipu, partner at Jenissi Management Consultants, a consultancy focused on energy and resources.

Apart from Rajasthan, states such as Jharkhand also plan to auction gold deposits. Chhattisgarh is the first state in India to auction gold deposits after the Bharatiya Janata Party-led government set up a template for natural resource allocation in India.

“We are trying to solve the impending legal matters so that these two gold blocks can be brought to auction. Mining leases for these blocks were earlier awarded to some other parties,” said another Rajasthan government official who also didn’t want to be identified.

VCCircle couldn’t ascertain the name of the lease holders.

Gold mine auctions may help meet India’s demand for the precious metal. India’s demand for gold, including jewellery, bars and coins, increased by 6% year-on-year to 233.2 tonnes in the fourth quarter of calendar year 2015, according to World Gold Council.

Queries emailed to Rajasthan government’s mining department and Union ministry of mines on 19 April remained unanswered.

The Mines and Minerals (Development and Regulation) Amendment Act, 2015 (MMDR) allows auction of mines bearing minerals excluding coal and lignite. A total of six mines have been auctioned in Jharkhand, Odisha and Chattisgarh under MMDR, with the central government set to receive revenues of Rs18,146 crore over a period of 50 years—the term for which the mines are auctioned.

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