Rio agrees to fulfil local market ore needs first

Rio Tinto, the world’s second largest mineral resource company whose proposed iron ore joint venture (JV) with Orissa Mining Corporation (OMC) ran into rough weather, has agreed to give priority to the domestic market before exporting the ore.

“They have agreed that exports will be only after catering to the domestic market,” Santosh Sarangi, managing director of OMC said.

OMC and Rio Tinto had set up the joint venture in the late 1990s but got mired in litigation. Rio Tinto holds 51 per cent in the JV, while OMC owns 44 per cent and National Mineral Development Corporation (NMDC) has a 5 per cent.

The original plan was to export bulk of the production from the 600 million tonne Malangtuli deposit in Orissa, which faced the opposition of the state government.

Sarangi said, annual production from the Malangtuli deposit would be to the tune of 25 million tonnes. NMDC, which happens to be India’s largest iron ore producer and exporter, produces around 30 million tonnes of iron ore, which implies that the JV would be the second largest producer of iron ore in the country.

The dispute was likely to be settled soon, Sarangi said adding that an internal committee of OMC would submit its recommendations to a state government-appointed task force soon. The task force was set up last year to resolve the issue. Sarangi said, Rio would bring in new technology and equipment to the joint venture, which was essential for mining of such large deposits. OMC had its own plans of taking its iron ore production from 4.5 million tonnes to 20 million tonnes by 2013-14. The project would mean a major boost to iron ore availability in India.