Indeed, security of mineral supply chains is already emerging as a priority. India’s goal as a manufacturing hub can only be realised if there is a security of raw materials. So far, GoI has pursued a strategy of looking for resources overseas. It can look at home as well.
There are three PSUs that have a monopoly over gold and copper mining – Hutti Gold Mines (HGM), Bharat Gold Mines Ltd (BGML) and Hindustan Copper. Each is an underperforming PSU. Privatisation could herald turnarounds that would squarely be in the national interest.
In FY24, India imported 795 t of gold worth $46 bn and 2.2 mn tonnes of copper, including ore and metal products, worth $12 bn. This may be a trend in recent times, but is an anomaly in India’s long history.
Kolar Gold Fields (KGF) in Karnataka (under BGML) has been reportedly producing gold since the Indus Valley civilisation. Gold production from this mine continued under several dynasties like the Guptas, Cholas and Vijayanagara, and continued under British rule. The company’s fortune dwindled after it was made a PSU in 1972.
Within 20 years, BGML was declared as ‘sick’ by BIFR in 1992, and GoI closed it down in 2001. Since then, various governments have made several attempts to revive BGML, but it remains closed.
This is a waste of an asset whose potential to yield gold remains. This is a fact confirmed by GoI’s own exploration agencies. Surveys commissioned by the mines ministry show the tailing dumps (alleged waste) at various BGML mines and certain areas still have an encouraging amount of gold resources. More significantly, in the current context of rare earths and critical minerals, there is the potential of palladium, tungsten and rhodium (a rare earth) in KGF.
India’s only operating gold-mining company, HGM, is also one of the oldest in the world, having a recorded presence since the pre-Ashokan era. The company produces a meagre 1.4 t of gold a year. Production in March 2023 was lower than in March 2013.
Hindustan Copper is the only vertically integrated copper producer in India with its own copper mines and smelter-refinery complex. In 2010-11, it produced 3.6 mn t of copper ore. In that year, it declared its intent to raise this production 3.5 times to 12.4 mn tonnes by 2016-17. Today, the company produces 3.8 mn t ore from mining. The target of 2016-17 has been shifted to 2028-29. Also, only a small fraction of the ore becomes copper concentrate from which the metal is made; so, overall, metal production is very low.
Because of their stagnant production record and consequential stagnation in revenues and profits, all three companies have missed the stupendous bull runs in copper and gold, which reached record high prices in 2024.
Perhaps the most damaging consequence has been the loss in actual and potential jobs. In the last decade, jobs have declined by 2,700 in HCL and 550 in HGM. In the case of closed BGML, thousands of ex-workers have been eagerly waiting for settlement of their lay-off compensation for over two decades.
In the case of these three PSUs, privatisation can only bring benefits. What they need is a professional management that can take quick decisions and stick to implementation schedules. They need big investment and the latest technology to raise production. GoI has too many priorities for spending. The private sector is better placed to commit the funds and bring the expertise. There is no doubt that thousands of jobs will be created, import dependency will be reduced and three top-class assets can regain their pride of place.