Mines Minister B K Handique today said his ministry has sought Cabinet approval for reviving closed PSU Bharat Gold Mines Ltd (BGML) by making it an arm of Nalco.
"We are seeking Cabinet approval to revive BGML because we believe that in the changed economic scenario, especially in terms of gold prices, it makes business sense to revive the operations of the company. The revival is proposed by making it a subsidiary of our navratna PSU Nalco," Mines Minister B K Handique told PTI.
The firm was shut down in 2001 after the PSU abandoned mining ore deposits due to lack of technology and monetary resources to prospect deep inside the mines. It was then declared a sick unit by Board of Industrial and Financial Reconstruction.
The Mines Ministry was evaluating the option of making it aluminium producer Nalco's subsidiary since past few weeks, following the Karnataka High Court's directive to the Centre to revive the gold mining company.
"It's a win-win situation for both Nalco and BGML. Since Nalco is looking to diversify its business and has sufficient capital resources for the same, BGML provides an excellent opportunity to it," Handique added.
A proposal was recently sent to the Cabinet Secretariat, according to which a Nalco JV with other PSUs could also acquire the company.
"There has been spurt in prices of gold by more than 200 per cent from the time the decision for closure was taken, Handique said.
Gold prices have risen to about 19,000 per 10 grams as compared to around Rs 4,780 per 10 grams since it was closed.
The Mines Ministry has chalked out a plan through which Nalco can bag the ailing company and sought Cabinet suggestion on the proposal. The Ministry has also proposed formation of a panel of secretaries headed by Cabinet Secretary to evaluate all the options available before Nalco for taking over the company.
"The first option is sale of shares held by government in BGML to Nalco, making it 100 per cent subsidiary of Nalco. The second option is sale of shares held by the government to Nalco, together with other relevant PSUs like HCL, BEML, etc.
"The third option suggested to the Cabinet Secretariat is conversion of government Plan Loans into equity and continued holding of minority stake by government with Nalco or Nalco with other PSUs," a Senior Mines Ministry official said.
Supporting Handique's assessment, the official said, "The gold prices over last 2 years have stablised at a level of above Rs 1,500 per gram... The spurt in gold price has given rise to expectation that operations of the BGML, with staffing at appropriate level, should become quite viable now."
In 2006, the Union Cabinet had approved inviting bids for purchase of assets of the closed unit. But the matter went to Court primarily due to opposition of trade unions to the sale.
The official further said, "With all round appreciation in value of real estate, the vacant and long stretches of land of BGML amenable for industrial development has given rise to hope that the assets of BGML, land in particular, must be valued at a price much higher than in 2000 when decision for closure was taken by BIFR)," said.
BGML is estimated to have a land bank of 10,000 acres and is 50-km away from Bangalore.
Nalco, which is looking to diversify into metals like gold, uranium, copper to hedge against price fluctuations, had earlier evinced interest to take over the company, the official said.
