Shimla, Aug 26 - State-run National Mining Development Corp (NMDC) plans to produce close to 100,000 carats of diamonds from the Panna diamond mines in Madhya Pradesh by 2010-11, Steel Minister Virbhadra Singh said here Wednesday.

The Panna mines were reopened this month after being closed for four years over environmental issues. NMDC, a state-run unit under the steel ministry, extracts minerals across the country.

'We will invest more than Rs.20 crore to acquire one lakh carats of diamonds from the Panna mines in the next financial year,' Singh told IANS at his residence, Holly Lodge, located in Jakhu hills here.

'We have requested the Madhya Pradesh government to allow NMDC to explore more areas adjoining the Panna mines so that the area could emerge as a diamond hub. Moreover, Chattarpur district is also rich in diamond reserves,' he said.

Maintaining that this would attract investments in diamond cutting and polishing, the minister added: 'The NMDC is also keen to explore other mineral-rich areas in Madhya Pradesh.