Gold in India

Gold in India

While China stole India’s long-held spot as top gold consumer in 2013, India’s demand for the yellow metal is still remarkably high. In fact, according to Thomson Reuters GFMS, the country’s demand for gold reached 987 tonnes last year. 

Gold’s popularity in India stems from the fact that it is considered a good omen for weddings and festivals, Bloomberg states. Furthermore, Indian citizens have “no social security other than gold,” Haresh Soni, chairman of Mumbai’s All India Gems & Jewelry Trade Federation, told the news outlet.

The Indian government raised the import duty on gold three times in 2013; currently it sits at 10 percent. As a result, gold smuggling is thriving in the country — the World Gold Council notes in a recent report that illegal imports came to around 200 tonnes in 2013.

That said, gold smuggling is not a new phenomenon in India. Bloomberg states that importing the metal for domestic use was essentially banned until 1990, but because demand for it still existed, between 10 and 217 tonnes of gold were brought into the country each year from 1968 to 1995.

Import duties are part of the reason illegal gold trade thrives in India, but they’re not entirely to blame. India’ slow gold production rate is also part of the problem. India produces only about 2.8 tonnes of gold annually, according to The Hindu. By comparison, China puts out around 370 tonnes per year.

The reason India’s production is so low is that it contains only three producing gold mines: Hutti, Uti and Hirabuddini. However, at one time, India was a much bigger gold producer, having mined at Kolar Gold Fields since the time of the Indus Valley civilization. Indeed, the Guptas, the Cholas, the Vijayanagar Empire and Tipu Sultan all engaged in mining there when they ruled, according to The Hindu, though it was only in the 1850s, under British rule, that large-scale mining began.

Later, in 1956, Mysore’s government gained control of the mines at Kolar Gold Fields; they were later obtained by the national government’s Ministry of Finance in 1962. Ownership was transferred to Bharat Gold Mines in 1972. Unfortunately, increasing costs and decreasing resources led to the mines’ closure in 2001, as per The Hindu.

Last year, however, the Supreme Court approved a plan to float global tenders to reopen the mines. One contender is Vedanta Resources (LSE:VED), which is looking to expand into gold mining and may bid for assets of the now-defunct Bharat Gold Mines. Kolar Gold (LSE:KGLD) also hopes to mine in Kolar Gold Fields and the surrounding area in the near future, and is currently conducting exploration.

Hutti Gold Mines

Hutti Gold Mines is a company in Karnataka that mines gold; it is owned by Karnataka’s government. Formerly Hyderabad Gold Mines, Hutti is now the only company in India that both mines and processes gold ore. It mines gold from its main mine, located in Hutti, as well as from satellite mines near the site.

The company has two gold units: the Hutti Gold Unit, which concentrates on the company’s mine in Hutti and its satellite mines Uti and Hirabuddini, and the Chitradurga Gold Unit, which focuses on an open-case mine in Tumkur district and an exploratory underground mine in Chitradurga district.

Hutti uses an extraction method that was developed with the help of the Indian Institute of Science, Bangalore. It oxidizes sulfides through the use of bacteria, thereby releasing gold, another article from The Hindu states. This method also produces other precious metals in sulfides, such as silver. Hutti constructed its first bioreactor for this process in 2001.


Related reading: 

China Set to Overtake India as World’s Biggest Gold Buyer

World Gold Council: Consumer Demand Hit Record High in 2013