Photographs: Reuters. Dilip Kumar Jha in Mumbai
Rio Tinto, one of the largest global miners, has started a trial run of diamond mining operations from its Bunder project in Madhya Pradesh.
Once fully operational, the project will put the state on the map of the world's top 10 diamond producers, says Bruce Cox, managing director of Rio Tinto (diamonds) in an interview with Dilip Kumar Jha. Edited excerpts:
After a long wait, the Bunder project has commenced production trials. What is your strategy going forward?
After three years of having commenced exploration for the Bunder project in 2001, diamond-bearing lamproite (volcanic rock) was first discovered in May 2004. Since then we have been developing a blueprint for future development.
The colour and quality of diamond we have extracted so far from this mine are satisfactory. With an overall investment of around Rs 2,200 crore we are planning to commence commercial production by 2016. Our investment is meant for a capacity of five million tonnes per year of processed ore.
How significant is this project in terms of the global diamond mining sector?
With an inferred resource of 37 million tonnes, containing an estimated 27.4 million carats and mine life of 25 years, this is the first diamond discovery in India for over 50 years and one of the only four new diamond mines globally likely to become functional in the next 10 years.
This project has been identified as being seven times richer than the Panna diamond mine, the only operating mine in India, with the likely production rate at least 20 times greater than Panna.
This would rank Madhya Pradesh among the top 10 diamond producing regions in the world in terms of volume and value.
What is your rough diamond selling strategy?
We are in an early stage of the project. Commercial production has not yet started. India is a powerhouse for conversion of roughs into polished diamonds and further into jewellery.
Bunder's roughs would be processed inside India. The exact commercial mechanism, however, is yet to be worked out.
What are your major challenges?
Indian policy has been a bit complex, with a number of mining restrictions. That complexity requires patience and diligence which we have demonstrated to continue mining. It is fair to say that Indian mining regulations are a bit difficult to navigate.
Have you reframed your global mining strategy in sync with an unfavourable economic environment?
Since the global economic crisis in 2008, all luxury goods industries have been resilient. But, in general, the economic development in India and China is better and hundreds of millions of new consumers are willing to buy luxury goods. The long-term fundamentals are robust.
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