I mentioned yesterday how global gold production hasn't fallen much in the face of lower prices.
And this week we got some indications that supply could actually expand. With one of the world's most famous gold mining districts looking to re-open, for the first time in nearly 15 years.
The place is the Kolar Gold Fields in India. One of the world's legendary gold mines -- with a production history that dates back to 1880. Related: Saudi Arabia Opening Up For Business As Oil Strategy Takes Its Toll
According to local press, India's government is very close to putting forward a plan to revive the Kolar. With officials saying they will table the scheme "within a month."
The effort will reportedly include rehabilitating existing mining infrastructure -- which consists largely of underground facilities, some extending two to three kilometres below surface. As well as reprocessing large amounts of gold-bearing tailings left behind by previous mining operations.
The government indicated that much of this work will be put out to tender for the private sector. It's unclear whether local or international firms would be favored -- although previous attempts to tender out the mine have largely attracted attention from local Indian firms. Related: Our Energy Problem Could Lead To A Major Debt Crisis
The district certainly has proven potential, having produced an estimated 25 million ounces of gold over its 120 years of operations. Mining was shuttered here in 2001 on low profitability -- and the facility has never operated during the period of historically-high gold prices that's prevailed over the last 15 years.
Those higher prices could open the door to modern mining methods -- of the kind that might be able to rehabilitate this former giant producer.
That said, there are other issues here. Most notably, legacy employment contracts and potential environment responsibilities -- related to state-owned firm Bharat Gold Mines Ltd, which operated Kolar from 1972 up until the 2001 closure, but has never formally been dissolved. Related: Is A Coal Price Recovery Near?
At the very least, this is a sign that India is continuing to push for ways to increase its gold supply. With officials from the country's mining ministry telling the press that they could auction up to 80 more historic gold mines around the country.
Watch to see if these projects do indeed go out for bids. And the identity of parties taking control.
Here's to bringing back a legend,
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Dave Forest
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