Rio Tinto to spend $2 billion in Orissa iron ore mining project

Tue, Mar 06, 2012

New Delhi : Australian mining major Rio Tinto is planning to invest around $2 billion (Rs 9,886 crore) in setting up a major iron ore mining project in Orissa. The investment, largest so far by the miner in India, would help it establish a strong foothold in the country’s mining space.

“It is a $2-billion project. We expect ramping up the project’s capacity quickly to 15 million tonnes per annum (mtpa) to cater to clients ,” Sam Walsh, chief executive of Rio Tinto’s iron ore division said during a press conference. Walsh is part of a group of chief representatives of Australian and Indian companies. The chief executive officers’ (CEOs) forum, that held its meeting today, has been formed to build bilateral economic partnerships across sectors. Total foreign direct investment (FDI) from Australia between April 2000 and December 2011 stood at $486.5 million (Rs 2,402 crore), a mere 0.3 per cent of the country's total FDI flows, according to the commerce ministry's data.

While Walsh did not share details of the project, he said the company has applied for mining approvals with the state government. Rio Tinto has 51 per cent stake in a joint venture (JV) it holds with the state government-owned Orissa Mining Corporation (OMC) to develop iron ore deposits in Keonjhar district. OMC has a 44 per cent stake in the JV while the rest is held by India’s state-owned miner NMDC Ltd.

According to the initial plan, the JV called Rio Tinto Orissa Mining Company, set up in 1995, had plans to build supporting infrastructure of rail links and port capacity. Walsh said the project would be commissioned as soon as the “government approvals” are received.

The CEO forum also indicted on plans to raise the concerns of Australian companies over the proposals of the new Indian mining legislation being worked out by the government. A Bill to revive the mining sector, that proposes mandatory sharing of royalty with locals, is currently pending in the Indian Parliament.

“The issues of infrastructure bottlenecks in mineral trade with Australia will also be put up before the government,” said Naveen Jindal, a Congress Member of Parliament and Chairman of Jindal Steel and Power Ltd during the press briefing of the CEO Forum organised by industry chamber Ficci. Jindal is the Indian co-chair of the forum. Taking up the issue of facilitating temporary entry of skilled labour and professionals into Australia is also on the agenda.

(sourced BS)