Orissa government likely to ink fresh JV with Rio Tinto

The Orrisa government is examining a draft regarding a fresh agreement with Anglo-Australian major Rio Tinto for mining in the mineral-rich state.

The world’s second largest iron ore producer had signed an agreement with the Orissa Mining Corporation (OMC) in 1995, for a 51:49 joint venture (JV) to start iron ore exploration at the state’s Malangtoli reserve. The JV, however, failed to get operational.

“Draft for a fresh agreement is being examined by the departments of law and finance. However, at this stage, I can’t say if it (the agreement) will ‘fructify or not,” Orissa’s industries and steel and mines minister Raghunath Mohanty said.

A decision on the issue would be taken only after the final report was given to the ministry, Mohanty said. “Right now, I can’t say yes or no.”

Last month, a Rio Tinto official had said the subsequent agreement was being re-negotiated and was awaiting government approval.

“In 1995, we had the main agreement for pre-feasibility work with OMC. The subsequent agreement is being re-negotiated and is awaiting government approval,” Rio Tinto India General Manager (iron ore), Siddharth Jain, said.

Iron ore is a key raw material for steel making. The demand for steel is expected to grow in double-digits in the country, where several mega infrastructure projects have been lined up.

“We are very keen to have iron ore operations in India,” Jain had said.

Owing to stiff opposition from displaced locals, as well as the slow process for getting approvals and stringent environmental norms, the country’s metal and mining companies have found it difficult to expand in tandem with the rising demand.

Some mining and steel majors like Vedanta, Posco and ArcelorMittal are facing problems in the state. The environment ministry had refused forest clearance to Vedanta Resources for alumina mining at the Niyamgiri hills.