For a country that needs huge amounts of gold every year, India’s domestic production has long been surprisingly limited. However, this imbalance could begin to shift as a new gold mine in Andhra Pradesh prepares to enter commercial production – marking a rare expansion in a sector that has seen little large-scale activity since independence.
The upcoming Jonnagiri gold project signals more than just another mining operation. It represents a structural shift, especially since it is led by a private company on a large scale, something India has not seen in decades, according to a report by the Stanley Foundation. Business Standard (Bachelor’s).
A new chapter after decades of stagnation
The journey of modern gold mining in India has been defined by a set of ancient processes. The Hoti Gold Mines, which began operations in 1947, have long remained the country’s primary source of locally produced gold. Before that, the famous Kolar goldfields, which began in 1880, dominated production until their closure in 2001.
Now, nearly eight decades after Hoti began operations, Junagiri is set to become the first large-scale gold mine to begin production in independent India. Although a small mine has come up in Jharkhand in recent years, its production has remained erratic and insignificant, making Junagiri a much more important development.
The private sector is taking the lead
Unlike previous projects, Jonnagiri is operated by Geomysore Services, a private sector company. The project is supported by Thriveni Earthmovers and Lloyds Metals, which together hold a majority stake, along with Deccan Gold Mines.
What distinguishes this project is its integrated approach. The company plans to not only extract the gold, but also refine it and sell it directly to jewelers under its own brand. The focus, at least initially, is to supply high-quality gold to local jewelers in Andhra Pradesh, especially small players.
Production goals and future ambitions
The project is already in the pilot phase, with commercial production underway. Commercial production is expected to begin soon, with a target of producing around 600 kg of gold by the end of FY27, P Prabhakaran, associated with the companies behind the project, told BS.
Looking to the future, the company aims to significantly increase production:
- Initial target: around 600 kg by FY27
- Long term ambition: up to 2 tons per year (subject to approvals)
If the higher target is achieved, it could overtake Junagiri Hoti to become India’s largest gold producer.
Why now? Global pressures and local opportunities
The timing of this project is no coincidence. With geopolitical tensions making gold imports more expensive, the need for domestic production has become more urgent.
India imports more than 800 tons of gold annually, and growing global uncertainty has increased the cost burden. Industry leaders believe projects like Jonnagiri could reduce dependence on imports and encourage the development of more mines across the country. There is also a growing feeling that ancient sites such as the Kolar Gold Fields are worth revisiting in order to revive them.
Why has India fallen behind?
India was not always this backward. In the 1970s and 1980s, the country’s gold production was comparable to that of major producers such as China, Australia and South Africa, with an output of about 5 tons per year.
Today the gap is stark:
India: ~1.5 tons
China: ~ 400 tons
Australia: ~350 tons
South Africa: ~250 tons
According to Hanuma Prasad Mudali of Deccan Gold Mines, two main factors have led to this decline, namely limited exploration activity and persistent bureaucratic hurdles.
For decades, policy focus has been on minerals such as coal, iron ore, zinc and copper, which were seen as more important for economic growth. Even after the sector was opened to the private sector in the 1990s, regulatory delays continued to slow progress.
It is estimated that India has gold reserves of around 100 tonnes, indicating that the sector still holds untapped potential.
