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India will soon approve a diamond mining lease for Rio Tinto, according to a senior official at the federal mines ministry.
The south Asian nation has been looking for investments from global miners because only 10 per cent of the country has been explored for its mineral wealth.
India's flourishing gems and jewellery industry meets its requirement for rough diamonds mostly through imports, and local mining by one of the world's top producers of rough diamonds is expected to reduce the country's dependence on other nations.
Rio Tinto – through its Rio Tinto Exploration India unit – plans to invest 22 billion rupees ($532 million) in the Bunder diamond mining project in the central state of Madhya Pradesh, the ministry official said.
Production was scheduled to start from 2016, depending on procedural clearances, the official said.
The Madhya Pradesh government had already recommended the mining lease and the mines ministry is expected to give its approval within a fortnight, the official said. The lease would be Rio Tinto's first for diamond mining in India, after nearly a decade in the country.
The company has been exploring for diamonds in India since 2001 and applied for a mining license in the Chhatarpur district of Madhya Pradesh in 2008.
Currently, Rio Tinto imports rough diamonds in India and then cuts and polishes the precious stone for sale in other countries.
India imports rough diamonds mostly from Africa and Russia.