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Diamond Mining in Panna

Panna is the only source of diamonds in India, but the damage caused by diamond mining is more than the benefits accrued to the country. 

The diamond belt covers about 1000 sq km and  extensive small-scale diamond mining activity has been carried on since the latter part of the 16th century.

While the largest amount of diamond excavation is now done by the National Mineral Development Corporation (NMDC), at the Majhgawan deposit,  20 km from Panna town, there are also an estimated 4,000 small shallow mines run by private operators. Only around a third of these mines are legal, according to the Centre for Science and Environment's 2008 State of India’s Environment: A Citizen’s Report, which was focussed on mining [CSE, p 215].

Most of the illegal mining is done in forest land as 'it is far easier to break the laws and mine inside the forests'. The mining is done under the protection of dacoit gangs and 'the police doesn't dare enter the forest when mining is going on' [CSE, p 216]. Many dacoit gangs are also themselves involved in illegal diamond and sandstone mining in the forest areas.

The mining has fragmented the Panna tiger reserve (see Sanctuaries in Bundelkhand), where the tiger population has already reduced to a bare two or three tigers per 100 sq km [CSE, p 215].

Apart from causing damage to forests, the mining is threatening ancient temples in the area, and the Kilkila river, which is the lifeline of Panna town [CSE, p 217].

The NMDC is also responsible for causing much damage. Tailings from its diamond mine used to be dumped into a stream that joins the Ken river, which flows through the Panna tiger reserve. Noise from blasting disturbed wildlife and solid waste was dumped outside the gates of the reserve. The mines outside the reserve were being operated without environmental clearance since 1995, and were closed under the directions of the Supreme Court in 2005 [CSE, p 215]. However, in August 2008, the  Supreme Court re-allowed mining by NMDC. NMDC is to spend 5% of its total capital cost for afforestation activities in  the Panna forest area, and an environment impact monitoring committee has been set up to oversee its efforts.

The irony is that all this activity is of little economic benefit to the country. Production in NMDC mines  increased by almost 20 times between 1961 and 1971, from around 1300 carats to over 19,000 carats, and in 2001, the mine and plant was upgraded for production of 84,000 carats a year, but this is a miniscule amount in the global market. Further, less than a third of  the diamonds in the Panna mines belong to the prized gem variety.

In 2003-04, the Panna unit of NMDC made a profit of little over Rs 3 crore on a turnover of around Rs 36 crore; in the same year, India's export turnover from imported diamonds, after cutting and polishing, was around Rs. 40,000 crore.

The revenue from private mines is even less. While around 16,000 carats of diamond were extracted by private mines in 2005, only 335 carats were deposited at the government diamond office [CSE, p 215]. The deposited diamonds are auctioned four times a year, and the amount paid by the purchaser for any lot of diamonds is given to private mine-owner who extracted the diamonds, after deducting royalty and taxes. A 'syndicate' operates in the diamond office, involving administrators and diamond traders, ensuring that the selling price is low [CSE, p 216].

NMDC employs less than 500 persons and is not a significant source of employment. The private mines are, but labourers get paid a pittance. The trader-administrator syndicate and illegal mine operators will be the only major losers if diamond mining in Panna is closed down forever.


  • Centre for Science and Environment, State of India's Environment: A Citizen's Report. Rich Lands, Poor People- Is Sustainable Mining Possible?, New Delhi: 2008

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