India’s NMDC joins the race for $9bn diamond project

India’s state-owned NMDC, the country’s largest iron ore producer and exporter, is about to be one of the latest big names in the local mining sector to bid for the massive Bunder diamond project, from which Rio Tinto (ASX, LON:RIO) exited early this year.

Sources familiar with the matter told Reuters the company was readying a bid for the $9 billion asset in Madhya Pradesh, which will place it as a formal competitor to Indian conglomerates Adani and Vedanta.

When and if operational, Bunder would be one of only four diamond mines likely to go into production over the next decade.

NMDC already has a diamond mine — Majhgawan — located mine in the same state, which now owns Bunder.

According to former owner Rio Tinto, Bunder (monkey in Hindi) is a top-class deposit that has the capacity to produce up to 3 million carats a year, generating about 30,000 jobs.

The company, which spent almost $120 million on the asset discovered in 2004, had planned to invest an extra $500 million to develop it. But last year Rio decided to mothball it due to regulatory hurdles, local opposition and weak diamond prices.

When and if operational, Bunder would be one of only four diamond mines likely to go into production over the next decade.

Indian diamonds are known for their quality, particularly those from the ancient Golconda mines, famous for producing a rare kind of extremely clear gems. One of them is the historic Archduke Joseph diamond, one of the world's most famous and rarest gems from Europe's aristocracy, which sold for $21 million in Nov. 2012.

The South Asian nation was the only diamond producing area in the world during the 18th century, when Brazil began developing a few mines. The trend was followed by South Africa in 1867 and then Australia, Russia and Canada.

India’s NMDC joins the race for former Rio Tinto’s diamond mine

Diamonds recovered at Bunder. (Image courtesy of Rio Tinto.)