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Fura Gems Seeks To Acquire India’s Bunder Diamond Mine

The Bunder mine, while it was being developed by Rio Tinto

Coloured gemstone producer Fura Gems Inc. today announced that it is “aggressively” looking at acquiring the Bunder diamond mine in India, that was explored and developed by Rio Tinto, but given up after having spent in excess of $90 million when the project ran into environmental hurdles. It is also looking at acquiring coloured gemstone mining projects in the country.

While fully intending to go ahead with the acquisition alone, Fura said it was also in advanced talks with a possible joint-venture partner. While the state government of Madhya Pradesh had indicated that it intended to tender out the Bunder mine to interested parties with all environmental and forest clearances in place, Fura President & CEO Dev Shetty noted, however, that the intended acquisition, is dependent on the final financial terms and conditions offered by the government.

Fura had earlier announced that it was interested in mining project acquisitions in India, and that it would market its global coloured gemstone portfolio in the country. Shetty said that Fura’s approach would be to start the mine small, with an output of some 1.5 million carats annually, gradually ramping up to an output of some 3 million carats a year. He added that Fura was looking at a financial outlay of $30 million over the first two years, with the project turning cash positive in the third year.

Shetty noted, “As a part of our larger expansion strategy, India is one of the top three markets for us. We are aggressively looking at the Bunder diamond project in Madhya Pradesh and projects in the states of Jharkhand and Odissha which have a huge potential in terms of mineral deposits. We will be exploring mining acquisitions in these regions and will be working closely with the central and state governments. Given our experience, we are confident of reducing India’s coloured gemstones imports substantially.”

Fura CEO Dev Shetty

Just over a year old, Fura has been on a rapid expansion path, having acquired an 80 percent interest in four ruby mining projects in Mozambique’s Montepuez district, next to the existing mine in that area operated by Gemfields, which is currently the world’s largest ruby producer in volume terms, and a 76 percent interest in the famed Coscuez emerald mine in Colombia.

Shetty told a press conference in Mumbai on Tuesday that Fura was also targeting an eight to ten percent share of the $2 billion global coloured gemstone market in three years’ time. He said that Fura’s highly experienced management team, many former Gemfields personnel, would achieve this by organising the highly unorganised coloured gemstone sector.

The company is also focussing much of its marketing efforts on India, as both India and China together currently constitute the largest emerald-consuming market as well as being large consumers of other coloured gemstones. Fura’s marketing strategy is based on a business-to-business model, targeting gemstone processors and jewellery manufacturers, as well as through them, a back-end information and product education initiative aimed at jewellery retailers.

Fura Vice President for Marketing & Sales Rupak Sen observed, “India is the largest cutting and polishing centre for emeralds in terms of volume. There is a growing demand for emeralds in the Indian market and we intend to capitalise on the same by strategically organising the sector.”

Shetty added, “We have achieved an important milestone by commencing the bulk sampling mining operation at the Coscuez emerald mine within eight weeks of the completing the acquisition of the mine. The initial production of 1,720 carats of emeralds, including 826 carats of top quality emeralds, during the early stage of the program further confirms the quality of the Coscuez emerald mine.”

He went on to say, “We will continue to build our geological knowledge of the license area and also strive to modernise the Coscuez mine. Fura has now become the first publicly listed company in the world to commence a bulk sampling operation in Colombia, the world’s largest supplier of emeralds.”

Shetty observed that Fura’s mission was to transform the coloured gemstone sector by injecting its core values of transparency, disclosure and ethics — all of which he said were sorely lacking in the fragmented and unorganised sector. “To take a small example,” he said, “despite having operated for hundreds of years, we are the very first people to offer the miners working there, a salary, benefits and health cover. Nobody who has worked there has ever been paid a salary before.” Fura says its local workforce at Coscuez should rise to 200 by month’s end and all of these initial recruits will undergo a training course on health and safety in mine operations before they actually work on extracting emeralds.

Though listed on Canada’s TSX Venture Exchange, Fura’s operational headquarters are at Dubai’s Almas Tower. The positioning, Shetty explained, was to ensure that the miner stayed close to the process pipeline’s manufacturing segment, understood its issues better and would be able to proactively respond to issues.

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