India's Gov't To Auction Off Bunder Diamond Project

Mining and Exploration
05/06/2019 12:17

The Bunder Diamond Project in the Chhatarpur district of Madhya Pradesh in India - a deposit estimated to have diamond reserves of 34.2 million carats - will be put up for auction, according to a decision taken by the state government at a cabinet meeting this week. The Project disappeared from the headlines about two years ago following Rio Tinto's announcement in February 2017 that it would relinquish its interest in the project "due to commercial considerations" and gift it to the Government of Madhya Pradesh. This announcement was followed about eight months later by reports that Indian resource conglomerates Vedanta (controlled by London-based Indian Anil Agarwal) and Adani (controlled by Gautam Adani) might place a bid for the $9 billion diamond project, and then with the news that India’s state-owned miner NMDC Ltd was also planning to place a bid. Little has been reported about it since then

The state mining department has said it will now begin the process of obtaining all necessary permissions for conducting the auction. No time frame seems to have been decided as yet, but according the GJEPC, one condition of sale has been reported: namely, the new owner would have to ensure that the rough diamonds are auctioned within the state, after which they may be exported eslsewhere for subsequent processing and trade.

Rio Tinto had commenced exploration in 2004, and in 2011 had entered into an agreement to develop the diamond mine, which was expected to go on stream in 2019. However, in 2016, as part of a global decision to drive shareholder value by conserving cash and cutting costs, Rio Tinto decided “not to proceed with the further development of the Bunder project”. The project was frought from the start, facing a series of environmental issues. The environment ministry claimed that surface extraction “would entail greater extent of forest land use leading to permanent loss of the high quality forest areas” and “the project proponent may also explore the possibility of underground (mining)”. At that point, after having spent a reported $500 million in developing the project, Rio Tinto Exploration India Private Ltd. announced it would hand the assets and associated infrastructure over to the government, including all land, plant, equipment and vehicles at the Bunder project site. The inventory was also to include diamond samples recovered during exploration.