Vedanta Limited has won India's first-ever auction of a gold mine, as the country prepares to permit private companies' participation in the sector to curb rising gold imports.
The company has emerged as the highest bidder by quoting 12.55 percent of the Indian Bureau of Mines' price of Rs 74,712 ($1,087) a troy ounce, the head of Chhattisgarh's Directorate of Geology and Mining, Reena Kangale, told Reuters.
The gold mine is located at Baghmara in the Baloda Bazar district of Chhattisgarh. The mine is spread over 607 hectares, with estimated reserves of 2,700 kg of the precious metal, Hindustan Times reports.
Currently, India is the world's second-biggest consumer of gold, next only to China. Nearly three-fourths of the gold imported by the country is consumed by retail buyers for jewellery.
Indians spent a whopping $267 billion (Rs 18 lakh crore) on buying gold over the past 10 years, even as prices of the precious metal rose over 250 percent during the same time, Kotak Equities said in a recent report.
To keep a check on rising gold imports, Prime Minister Narendra Modi had launched three gold schemes Nov. 5 last year.
Gold prices have witnessed a sharp rally in recent weeks amid increased demand for the metal due to its safe-haven status. Gold prices closed at Rs 29,250 per 10 grams on Saturday.
Meanwhile, gaining a gold mining lease will help Vedanta to improve its financials, as it continues face difficulties from a slump in other commodity prices. It reported a 99 percent fall in its profit for the December quarter.
The mining companies around the world are under pressure to sustain operations amid a slowdown in China, one of the world's biggest consumers of metals.
Falling aluminium and crude oil prices have been weighing heavily on Vedanta for the past few years, as the company derives a major part of its revenues from these two commodities.