After months of keeping mum, Rio Tinto is finally revealing its plans for its Orissa iron ore joint venture in India. Rio’s managing director of India Nic Senapati released to the Indian media that the company and its partners plan on investing up to AUD$1.94 billion into the Orissa project during the next few years. He also revealed that Rio plans on utilizing the iron ore to supply the domestic Indian market rather than exporting it.
“We are looking at a scale of between five million and 25 million tonnes per annum in the long term,” Dr Senapati was quoted as saying in the Business Line newspaper.
Currently, Rio owns 51 per cent of the project, the state-owned Orissa Mining Corp (OMC) owns 44 per cent, and National Mineral Development Corporation (NMDC) owns 5 per cent. Rio has been managing the Orissa area since the 1990’s and maneuvering Indian markets to create commodities demand.
Rio reportedly has renegotiated an agreement with OMC to develop and mine three iron ore deposits in the Keonjhar district of Orissa which is also known as Orisha. The deal will be finalised soon.
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Though these plans come as a surprise to the rest of the world, Rio has been preparing for this move since June, when Alan Davies, Rio’s head of non-Australian iron ore operations told analysts that the growing Indian steel market needed domestic iron ore. Davies also mentioned that Orissa would be a major player in the Indian mining industry.
Then in August, Rio began putting its technical ducks in a row to begin operations in India by commercialising its Hismelt iron ore smelting technology and moving its aged Kwinana Hismelt plant to Jindal Steel’s Orissa plant. Rio had signed a memorandum of understanding with Jindal Steel to use their plant.
Rio Tinto is also expecting to export thermal coal directly to India to meet their growing demand.