What a waste! KGF’s forgotten gold dumps could be worth Rs 30,000 crore: Report

Based on 30 million tonnes of tailings and a conservative Rs 6,000 per gram price for gold and palladium, the extractable value shoots up to Rs 36,000 crore.

Abandoned for years, Kolar Gold Fields’s dumps may shine bright for the government. Twenty-four years after mining was shut at Karnataka’s historic KGF, the Union mines ministry has launched the process to auction nine massive gold-rich tailing dumps, potentially worth up to Rs 30,000 crore, The Print has reported.

These mill tailings, essentially heaps of residue left after years of extraction, still hold residual gold and even rare platinum group elements (PGEs) like palladium and rhodium, the report said.

The ministry has appointed SBI Caps as the transactional adviser, with the auction expected to conclude in 18–24 months.

“With gold prices touching Rs 9,000 a gram, even extracting 1 gram per tonne would be profitable,” the report quoted a senior mines ministry official as saying.

Moneycontrol couldn’t verify the report independently.

Rs 36,000 crore in residue?

A 2021 study by the Non-Ferrous Materials Technology Development Centre (NFTDC), an R&D body under the ministry, revealed that a minimum of 2 grams per tonne of final extractable value is achievable, double the earlier estimate.

Based on 30 million tonnes of tailings and a conservative Rs 6,000 a gram price for gold and palladium, the extractable value shoots up to Rs 36,000 crore. The presence of rhodium, which commands even higher market rates, could push it further.

The Print report cited the NFTDC report, which claims the proposed extraction process is cyanide-free.

State nod, Centre’s push, and a century-old demand

After years of delay, the Karnataka cabinet gave its nod in June 2024 to auction these tailings. While the dumps sit on land owned by Bharat Gold Mines Limited (BGML), a central PSU that ran KGF till its closure in 2001, state approval was mandatory before extraction could begin.

A workers' forum led by former BGML chief engineer KM Divakaran has long lobbied for the revival of mining, writing to Prime Minister Narendra Modi and submitting a detailed master plan.

According to a Bhaskar report, Divakaran said India is missing out on a potential 100 tonnes of annual gold production from KGF, which would dwarf the country’s current output of just 1 tonne.

“Despite having 27 gold-bearing lodes, only 2 have been mined. The British extracted over 900 tonnes from just those,” Bhaskar’s English website  quoted him as saying.

Moneycontrol couldn’t verify the report independently.

Toxic water, rusted machinery: A pricey revival

Toxic cyanide-laced water has accumulated in the 1,400-km network of underground tunnels over the past 24 years, KGF-based advocate P Raghavan told Bhaskar. Most of the machinery is rusted and obsolete. Reviving mining would require massive investment.

The rise, fall and possible rebirth of ‘mini England’

Once dubbed ‘Mini England’ for its cool climate, European architecture, and buzzing Anglo-Indian population, KGF was home to the world’s second-deepest gold mine and Asia’s first electrified mining operation.

In 1902, the British set up a hydroelectric plant in Shivanasamudra, 220 km away, to power KGF, making it the first mining town globally to use electricity. The mining boom brought Tamil and Telugu workers from the Madras Presidency, Anglo-Indian supervisors, Punjabi guards, and British engineers, building a township of bungalows, golf courses, hospitals and social clubs, the Bhaskar report said.

Robertsonpet, one of India’s earliest planned residential layouts, was developed in 1903 to house workers. By 1930, over 30,000 people worked in the mines.

With state and union governments now aligned, a cyanide-free technology on hand, and gold prices soaring, the ghost town of KGF might finally get a second wind, which would not only potentially boost India’s mineral output but also generate jobs.