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On Golconda Rock

A spate of diamond deposit finds sees the majors come calling

On Golconda Rock
On Golconda Rock
Diamonds In The Deccan
  • Geological findings point to diamond deposits in seven districts in Andhra Pradesh (AP)
  • Of the 150 kimberlite pipes (funnel-like rock formations which are the source of diamonds) in the country, 120 are in AP
  • 4-5 carats of diamonds per 100 tonne of rocks processed is considered profitable. The AP deposits are expected to generate 6 carats /100 tonne
  • Seven companies, including De Beers, have applied for 42 prospecting licenses covering an area of 1,495 sq km
  • Thanks to the kimberlite findings, earnings of the state mines department has gone up from Rs 750 crore three years ago to Rs 1,750 crore now


Carbon Footprint

Foreign firms with their sights set on Andhra Pradesh:
  • De Beers (South Africa)
  • Rio Tinto (United Kingdom)
  • EMIL Mining India Pvt Ltd (Australia)
  • Leo-Mysore Services India Pvt Ltd (Australia)
  • Brown Tech Services Pvt Ltd (Unspecified foreign backing)
  • Dines Management Pvt Ltd (Foreign funded)
  • NMDC (Only Indian company, a PSU)


The international diamond industry has found its next big destination, and it's the land of the Nizams. Geological findings in seven districts of Andhra Pradesh have shown up extensive diamond deposits which, naturally, has got the big boys interested. Already, seven companies have applied for prospecting licences (42 in all) covering a land base of over 1,495 sq km. This includes big players like De Beers, Rio Tinto (CRA Exploration India Pvt Ltd), Crown Tech Services and Mines Management, Geo-Mysore Services India Pvt Ltd, AMIL Mining India Pvt Ltd, the National Mines Development Corporation (NMDC) and Mines Management Pvt Ltd.

The latest sparkler rush was triggered off by the discovery of an abundance of kimberlite pipes (funnel-like rock formations which are the primary source of diamonds). Vijay Prasad Dimri, director, National Geophysical Research Institute (NGRI), says 120 kimberlite pipes have been detected in AP, a "hugely inspiring" figure for prospectors given the national find is just 150. Normally, only 5-6 per cent of kimberlite pipes contain diamonds but the percentage is much higher in Andhra. Dimri says the NGRI, which did exploration work in Anantapur district, can vouch for at least 20 diamondiferous (diamond-bearing) kimberlite pipes in the region. The Geological Survey of India (GSI) also recently discovered 23 'pipes' in various parts of the state.

Among the firms in the field, diamond major De Beers tops the list, having applied for 16 prospecting licences (PLs) over 495.76 sq km in Anantapur, Kurnool, Prakasam and Mahbubnagar. UK-based Rio Tinto, the world's second largest diamond mining firm, has applied for 10 PLs in Anantapur and Kurnool over 639.50 sq km; NMDC has applied for nine PLs in Anantapur; AMIL Mining has sought five PLs (24.87 sq km) in Anantapur, Kurnool and Kadapa; Geo-Mysore Services wants four PLs (164 sq km) in Kadapa, Chittoor, Anantapur and Nellore, and Crown Tech Services and Mines Management Pvt Ltd have sought one PL each.

At the prospecting stage, companies mainly go for drilling operations where they bring out sub-surface rocks, analyse them for incidence of diamonds and their commercial viability. Even 4-5 carat per 100 tonne is considered profitable. V.D. Rajagopal, MD, Andhra Pradesh Mineral Development Corporation (APMDC), says some firms are already forecasting 6 carats on an average—which is excellent by industry standards. The actual mining will happen when individual companies are granted a mining lease for 10 sq km. Mining leases in India are given for 30 years, and are subject to periodic review.

A Rio Tinto report says it has located 14 diamondiferous pipes, mostly in Anantapur. In 2006, the GSI discovered one pipe at Timmasamudram (TK-4) with an incidence of 65 carats per 100 tonne, making it the richest find in India. State mines minister P. Sabita Indra Reddy couldn't be happier. "Three years ago, the mining department's revenue was Rs 750 crore. It's now touching Rs 1,750 crore, which is more than even that of Jharkhand. With MNCs keen to explore diamond deposits in AP, our revenues are bound to increase enormously," she states. According to her, most of the 42 PLs for diamond prospecting have already got the Centre's nod.

The entry of MNCs into the mining sector has been a long time coming. The winds of change first blew in with the liberalisation wave of the '90s, the National Mineral Policy (1992) easing restrictions on fdi in the mineral sector. But the sector's progress continued to be slow. To correct this, the Centre set up the Anwar-Ul Hoda committee to suggest policy changes. Some of the suggestions of the panel have been quite radical. For instance, it recommended giving PLs for eight years instead of three and mining leases for 100 sq km instead of 10 sq km. The Hoda committee also suggested introduction of a large area prospecting licence system, with an upper limit of 5,000 sq km.

APMDC sources say MNC biggies like De Beers and Rio Tinto are "eagerly awaiting" a cabinet nod for these crucial recommendations. Diamond mining is a high-risk business, and requires deep pockets. Naturally, companies think their odds would be better if they have a larger area of operation. Under the current mining policy, 10 per cent of the diamond sale price goes to the state. This too is pending upward revision.

Rajagopal says the interest of MNCs has also been spurred by AP's "sparkling history". After all, world-renowned diamonds like the Kohinoor, the Great Moghul, the Hope, Orloff and Dariya-e-Noor (a rare blue diamond) were all found in AP from the 6th century onwards. These are the 'Golconda diamonds', discovered in the region located between the lower reaches of the Godavari and Krishna rivers, known then as Golconda. "The Centre wants us to give top priority to diamond exploration after the latest positive survey results...it wants the state to progress to the mining stage in three years," says Rajagopal.

It's not all rosy though. The mining industry will bring with it its own set of problems. Environmentalist Prof Satyalakshmi Kommaraju points out that gold and diamond mining, be it open cast or underground, is bound to lead to hydrological imbalances. In case of open cast mining, stored water oozes out and gets exposed to external atmosphere since miners dig as deep as 15 feet. Nearby water bodies get contaminated and radon gas (which is cancer-causing) is released into the atmosphere. Tree cover in the area will also be lost. But most importantly, when the dug-up soil is refilled into the pits, it is in powdery form. As has been proved in other areas of the world, open pit mining damages the land permanently which is then rendered unfit for cultivation. The soil no longer retains water as before. Large-scale displacement of people is what automatically follows. In underground mining, Satyalakshmi points out that the surface soil remains intact but water levels are exhausted even more rapidly. The danger of poisonous gases being released within the mines is also high.

The AP government, though, is not looking too far beyond the 42 PLs issued now. With the Nallamala forests cleared of Naxals, the APMDC is hoping the MNCs will be eager to prospect in the forests in Kurnool, Guntur, Prakasam, Mahbubnagar and Nalgonda. Officials say a plus factor is that other mineral-rich states, like Chhattisgarh and Jharkhand, are not high on the safety graph of MNCs.

As current figures stand, the largest number of reconnaissance permits in the country have been granted in AP. India's diamond industry is worth $1.66 billion at current estimates and actual mining of rough diamonds could take this figure to dizzying heights. An optimistic Rajagopal says, "Andhra will soon emerge as a major centre for diamond mining in the country and regain its past glory." A sparkler in the rough then.

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