NMDC, Rio mull JV to buy mining assets

Besides acquiring global assets, the partnership could be extended to domestic market.

State-owned mining firm NMDC is in talks with Rio Tinto, the world’s second largest diversified mining company, for a 50:50 joint venture, which would bid for global mining assets.

NMDC chairman and managing director Rana Som said, “We are in discussion for a 50:50 joint venture. Rio Tinto was one of the international parties to evince interest in establishing a joint venture when we floated a tender.”

Earlier this year, as many as 35 companies had expressed interest in NMDC's global tender for floating a joint venture for mining activities. Out of which six were foreign companies.

“Rio Tinto does not comment on market rumour or speculation,” a Rio Tinto spokesperson said.

Besides acquisition of global assets, the partnership could be extended to new assets in the domestic market also. Industry sources said that the partnership could enhance the global mining giant Rio Tinto’s presence in the domestic market significantly.

In June, Rio Tinto had submitted mining lease applications for its diamond project in the Bundelkhand region of Madhya Pradesh.

According to the international miner, the targeted diamond grades were at least three times greater than that of the Panna mine. Panna Mine is owned by NMDC and is the country's only hard rock diamond mine.

Like Rio Tinto, NMDC is also involved in the exploration and mining of a wide range of minerals. Also, in the domestic market, NMDC has filed mining applications for iron ore and coal in almost all the mineral-rich states.

If the discussions with Rio Tinto get through, it would be the domestic miner's second joint venture company.

The state-owned miner is also in the process of forming a joint venture company with Spice Minerals and Metals of the Spice Energy group.

Som said that the two joint venture companies would bid for different assets in different countries. NMDC and the Spice Energy group have formed a joint working group, which is conducting due diligence of some assets, including two iron ore deposits in Armenia, which may require an investment of $500 million. A technical team was currently in Armenia, he said.

The joint working group had also identified a potash deposit in Eritrea in Northeast Africa for acquisition. The working group will hold the due diligence soon.

“We have formed the joint working group to conduct the due diligence before the company is formed,” said Som.

NMDC produces around 30 million tonnes of iron ore from its Bailadila mines in Chhattisgarh and Donimalai in Karnataka. The state-owned miner is a major supplier of iron ore to JSW Steel, Essar Steel, Ispat Industries in the private sector and Rashtriya Ispat Nigam in the public sector.