Vedanta, Adani eye Rs58,900-cr MP diamond mining project

Indian infrastructure and resources conglomerates Adani Enterprise and Vedanta group are looking to bid for the Rs58,500-crore ($9-billion) diamond mine project in Madhya Pradesh, reports quoting sources close to the development said.

The Madhya Pradesh government is likely to invite bids for the diamond project, in the first week of November according to sources.

The project, which was abandoned by global miner Rio Tinto last year, has an estimated deposit of over 27 million carats of diamonds.

Rio Tinto walked out of the project after the Indian government sought rival bids from other multinationals like Anglo American for the diamond and gold mining projects.

State government officials in Madhya Pradesh confirmed that executives from the two companies had met him over the project, but declined to identify the companies or share any details. Manohar Lal Dubey, secretary in the state mining department merely said two company executives had met him over the project.

Dubey said the state government will soon float tender for leasing the Bunder area in which Rio Tinto had carried out prospecting and established availability of diamonds, adding that the auction would be held around 40 days after the notice inviting bids was published.

Mining giant Rio Tinto shut down its Rs2,200-crore diamond mining project in Bunder, Madhya Pradesh in August 2017 and handed it back to the MP government in February this year (See: Rio Tinto exits Bunder diamond project in MP, gifts it to state government).

The Bunder diamond project was discovered in 2004 by the Australia-based mining major and in 2010 it inked an agreement with Madhya Pradesh for the development of the project. But Rio Tinto had to fend off legal fights with green activists.

"As part of its ongoing efforts to drive shareholder value by conserving cash and cutting costs further, Rio Tinto has decided.

Rio Tinto had estimated an inferred resource (the first quantifiable estimate of an ore-body) of 37 million tonnes, containing 27.4 million carats.

The firm had estimated that at least Rs2,200 crore will be required to fully develop the Bunder diamond project. Once developed, the Bunder diamond mine is expected to place MP in the top ten diamond producing regions of the world.

Rio Tinto "gifted" the Bunder deposit to Madhya Pradesh in February after saying last year that it was pulling out to conserve cash and cut costs.

The company spent around $90 million over 14 years on Bunder, located in a forested area important to tiger and wildlife habitats, with the plan to invest up to $500 million. The project had been hampered by delays in obtaining environmental permissions.

Small teams from both Vedanta Resources, controlled by London-based Indian billionaire Anil Agarwal, and fellow billionaire Gautam Adani's Adani Group visited the site in recent months, three sources with direct knowledge of the matter said.

Madhya Pradesh official Dubey said two company executives had met him over the project, but declined to identify the companies or share more details.

An Adani executive had informally approached the environment ministry regarding Bunder ahead of Rio's exit announcement in February, according to a source with direct knowledge of the matter.