'India's gold mine output at 1.6 tonnes in 2020, may soar to 20 tonnes/year'

New Delhi: India's gold mine production stood at a mere 1.6 tonnes in 2020 but could rise to 20 tonnes per year in the long-term, World Gold Council said on Thursday.

The World Gold Council (WGC) launched a report titled Gold Mining in India', as part of a series of in-depth analysis on the Indian gold

market.

The report has highlighted that India has a rich heritage of gold mining, but industry's growth has been hampered by legacy processes and under-investments, WGC said in a statement.

"Despite India being one of the world's largest consumers of gold, the mining market operates on a small scale and is not an easy one to enter. In 2020 gold mine production was just 1.6 tonnes.

"India's current resources, when compared to production and resource levels in other countries, could reasonably be expected to support annual output of approximately 20 tonnes per year in the longer-term," the council said.

The report has listed regulatory challenges, taxation policies and infrastructure as major problem areas.

Somasundaram PR, Regional CEO, India, World Gold Council, said: "Given that India is one of the world's largest gold consuming countries, it makes sense for it to develop mining capacity. But change is needed for this to happen, legacy hurdles must be reduced considerably, and investments encouraged."

He noted that there have been promising signs in recent years with changes in the Mines and Minerals (Development and Regulation) Act and introduction of the National Mineral Policy and National Minerals Exploration Policy.

"If this trend continues, India's mine production is expected to increase in the coming years. That said, we see this materialising only over the longer-term as potential investors will, for the foreseeable future, wait to see how successfully the new policies will be implemented and how effective they will be," Somasundaram said.

He mentioned that gold mining has the potential to provide significant sustainable socio-economic development for India, not just through investment in exploration and mining for gold, but also through the legacy of training a skilled workforce.

"Furthermore, mining helps to bring infrastructure investment to a region, initiating and supporting associated service industries, many of which often persist long beyond the working life of the mine.

"It is only when investors can see real evidence of India managing its gold mining assets more efficiently that we can expect inward investment to emerge. And at that point, the country's gold mining sector will enjoy a much brighter future," Somasundaram said.

On the three problem areas, the WGC report said that the process of securing approval for a mining licence is usually lengthy, involving multiple agencies and requires 10-15 approvals for a single licence.

"Applications are often subject to substantial delays, leading to a lengthy and costly hold-ups in project development. All of this dissuades investment, particularly from multi-national companies who can invest their resources into countries with similar geological perspectivity but with less legacy burden," the statement said. Import tax on mining equipment and other direct and indirect taxes remain high compared to other

countries.