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De Beers, RioTinto eye mineral-rich Karnataka

Diamond giant De Beers and Anglo-Australian miner RioTinto are eyeing the mineral-rich Karnataka as a source for diamonds and metals, an official said Friday.

"De Beers have approached us to mine our diamonds and other stones. They are also planning to do retailing of their gems in India through exclusive showrooms," B S Patil, Principal Secretary in the Karnataka state's industry department, said.

"The government may allow a majority stake for the company, the world's biggest diamond miner, if it so desires," Patil said, referring to the South African firm.

He said RioTinto, the world's number two mining company, had also approached the state, which will unveil a new mineral policy within a week.

Both the companies would be represented at a two-day global investors meet opens in Bangalore next week.

Karnataka is rich in diamonds, gold, silver and platinum.

India threw open the mining sector to private companies for exploration six years ago. Some Indian private companies are mining in the state and paid royalties of 25 million dollars to the Karnataka government last year.

"We do not know as yet how much reserves we have. Only when these companies come in and study the prospects can we make out the exact details.

"But surely, once they enter, the royalty amount to the government will triple in five years," said M Basappa Reddy, director of the department of mines and geology.

Reddy said the government would enforce strict environmental guidelines before granting mining licences to private players.

The state government is planning to give out 10,000 square kilometres of prospecting areas on a "first-come first-serve" basis to private companies.

"It may take five to seven years for the companies to mine diamonds finally as the initial prospecting licences are valid for a period of three years and then the mining lease is granted," Reddy said.