The diamond story begins in India and, with the development of the Bunder Project, the country’s first “world class” diamond mine, it’s possible that the story is coming full circle, as IDEX Magazine Editor-in-Chief Danielle Max discovers.

 

Think diamond mining and the countries that spring to mind are likely to be Russia, Canada, Botswana, Zimbabwe or South Africa, all countries with a proven track record when it comes to diamond production. With the development of the Bunder Project in the state of Madhya Pradesh it is possible that Indian diamonds may once again be available in the near future.

                                                                                                            

According to Rio Tinto, which is developing the operation, the Bunder Project, located in the Bundelkhand region of the state, 500 kilometers south east of Delhi, is the company’s most advanced diamond project, and there are potentially a heap of diamonds just waiting to be unearthed. (The name Bunder, which means monkey, is taken from the first animal seen by geologists when they initially visited the area.)

 

Diamonds were first discovered in the Bundelkhand area as a result of Rio Tinto’s regional exploration reconnaissance in 2004 (Rio Tinto has been exploring since 1996 in India for diamonds and other minerals. The company has prospecting licenses or applications for prospecting licenses in Andhra Pradesh, Karnataka, Maharastra and Chattisgarh. De Beers, though its joint venture with the Hindustan Diamond Company Private Ltd, is also prospecting in Madhya Pradesh as well as Andhra Pradesh, Chattisgarh, Karnataka and Tamil Nadu.)

 

Following the discovery, a Prospecting License was granted in 2006, which allowed an Order of Magnitude study to begin and in 2008, the company applied for a mining lease, which is still undergoing approval.

 

The potential mine is comprised of a cluster of eight lamproites (mantle-derived volcanic and subvolcanic rocks). So far, the Atri lamproite has been the focus of the company’s drilling and sampling.

 

This lamporite, which consists of two coalesced pipes with a surface area of 17 hectares, has been shown by the Order of Magnitude study to be suitable to conventional open pit mining and diamond processing technology, which is good news, both for the company but also for India.

 

Rio Tinto said that an “Inferred Resource” has been defined of 37 million tons, containing 27.4 million carats. An Inferred Resource is mining terminology for the first quantifiable estimate of the ore body, inferred from geo-scientific evidence, drill holes, or other sampling procedures, and before testing and sampling information is sufficient to allow a more reliable and systematic estimation.

 

While the potential certainly looks good, Inferred Resources require further exploration to upgrade them to higher levels of certainty, an obvious stage given the cost of developing a mine. This is the stage that the company is currently working towards with its pre-feasibility study, which commenced at Bunder in July 2010.

 

As part of the mine development, in October 2009, Rio Tinto inaugurated a sample processing plant on the site. This sample processing plant, said the company, is a unique and state-of-the-art installation, costing $7 million and capable of processing at 10 tons per hour.

 

It is too early to speculate about the sizes and qualities of the diamonds that will potentially come out of the mine, but the company is satisfied with the initial results. “We do not yet have sufficient confidence levels around quality, size and colour distribution at Bunder,” said Bruce Cox, managing director, Rio Tinto Diamonds. “What we can say with confidence is that we have been very pleased with the sample processing results to date.”

 

In October 2010, the company signed a State Support Agreement with the government of Madhya Pradesh, which will get a mining royalty of 10 percent on the sale of diamonds recovered at the site. “The agreement is a critical milestone and an endorsement of the mutual commitment we have with the government of Madhya Pradesh,” said Cox, explaining the development of the mine, which is still some years away.

 

The estimated total cost of developing a mine at Bunder is somewhere in the region of $500 million for a capacity of around five million tons per year of ore processed.. “We are currently conducting detailed geological, metallurgical, engineering, social impact and environmental impact studies to determine the best development option for the project. It is too early to comment on supply, demand or price implications,” said Cox.

 

Despite this hesitation to speculate, at least publicly, about what may be lying buried underground, the company has made the potential importance of the new mine clear since it began developing the operation. “The Bunder Project is an exciting development for the global diamond industry and is the next step in the development of a world class diamond mine in India,” said Cox. The company believes the project is the world’s biggest diamond discovery in the past 10 years, welcome news for an industry all-too conscious of the fact that new diamond sources are few and far between.  

 

While the glory days of the Indian mining industry probably lie in the past, Rio Tinto is hopeful about the potential of the Bunder Project. The company said it has identified a diamond resource seven times richer than the Panna diamond mine (see sidebar), with a likely production rate at least 20 times greater than Panna. Consequently, Rio Tinto has estimated Madhya Pradesh would rank, in terms of volume and value, in the top 10 diamond producing regions of the world.

 

“Diamonds are one of the few commodities where it does look as if there are geological limitations on new discoveries,” said Rio Tinto’s head of exploration, Eric Finlayson, in an article published in the Business Standard. “The simple fact is there [has] been very few diamond discoveries in recent years by anyone and this is one of the biggest ones. Our exploration effort continues in India for other diamond deposits. I’m pretty sure that we’ll be successful,” he said.

 

The mine is important not only because it could help balance the discrepancy between rough supply and polished demand, at least slightly, but because it would give India control over the complete pipeline, from mine to finger as it were, an important consideration for a country that is the world’s largest diamond polishing industry and an important consumer market.

 

In addition, it could give India, the largest polishing market in the world, added access to rough, which could also some way to moderate the prices of raw materials and do something to balance the discrepancy between rough and polished prices. Although it is too early to speculate, it could be that this rough could be allocated specifically to India, although, of course, that is entirely up to Rio Tinto.

 

As well as diamonds, the mine is also bringing new employment opportunities to the Madhya Pradesh community. As of 2010, the mine employed about 400 people, 65 percent of whom come from the local region.

 

But while the mine could become a significant provider of diamonds, it is not likely to happen any time soon. “There are several approvals required for opening a mine and these are time consuming processes. Critical to the mining timeline is the mining lease, which was applied for in June 2008. The approval process requires submission of a mine plan in conjunction with forest and environment clearances. As we have not yet experienced this process, we can not speculate how long it will take,” explained Cox.

 

However, it appears that it will be worth waiting for, “The opportunity to mine, manufacture and market diamonds in India is great news,” he concluded. Great news indeed when the potential for new mines to come online seems to limited. Diamonds are a fragile and precious resource, and once they are gone, they are gone.

 

The Panna Mines

While the Bunder Project is expected to be a significant mine, there is already some mining taking place in Madhya Pradesh in the Panna district of the state. Mining in Panna is managed under the Diamond Mining Project of the National Mineral Development Corporation (NMDC) of the government of India. While the diamonds that are discovered tend to be quite small, usually between 0.50 to 0.70 carats, they are known for their colors famed diamonds – clear brilliant “Motichul,” green-tinted “Panna” faint-orange “Manik” and sepia colored “Bansput”. (The biggest diamond found at Panna, in December 2003, came in at a respectable 29 carats. Since the mine reopened, the biggest find weighed 10.8 carats).

 

The Panna mines were closed for a four-year period for environmental reasons, only reopening in August 2009. The mines are located in the heart of the Panna National Sanctuary, a tiger reserve.

 

With the reopening of the Panna mine, we will be able to meet at least part of the domestic demand of diamonds," said Union Steel Minister Virbhadra Singh at the reopening ceremony, quoted by oneindianews.com. He also said that the company was attempting to find other diamond sources in the region.