Rio Tinto keen to revive its JV with OMC

Anglo Australian mining major Rio Tinto is keen to revive its $2 billion (Rs 11,000 crore) joint venture with Odisha Mining Corporation (OMC) even as the state run miner is no more interested in the pact.

The Australian High Commissioner Peter N Varghese, who is scheduled to visit the state later this week along with Sam Walsh, Chief Executive Iron Ore, Rio Tinto , has sought appointments with Chief Minister Naveen Patnaik and Chief Secretary BK Patnaik to hold discussion on the issue.

“I would also like to request a meeting with you in Bhubaneswar on 19 or 20 October. I would be accompanied by Sam Walsh , Chief Executive Iron Ore and Australia Executive Director, Rio Tinto,” Verghese wrote to Patnaik.

The envoy, who will be on a two day visit to Odisha to attend the Oz Fest Indigenous Cultural Concert in Bhubaneswar, said, Rio Trinto is strongly committed to developing the iron ore sector in Odisha through its joint venture with OMC. Rio Tinto had entered into a JV with OMC on February 24, 1995 to develop Gandhamardhan and Malangtoli iron ore deposits in Keonjhar and Sundergarh districts with a mining capacity of 25 million tonnes per annum. Seventeen years after it had inked a joint venture pact, OMC recently said that it is no longer keen to revive the project. “In the recently held board meeting it was decided that the JV pact will not be lucrative for the corporation. We have already informed the state government regarding our intent. It is now going to be the government’s call whether it wants to renew the project or not,” said Saswat Mishra, chairman and managing director, OMC.

The mining pact ran into trouble after differences cropped up between the partners over the export of ore. The anglo Australian miner, which was to hold 51 per cent stake in the JV, was keen to export half of the iron ore mined. OMC, on the other hand, emphasized on the meeting the raw material needs of the domestic steel industries. These differences prompted OMC to move for cancellation of the pact as per advice of the Solicitor General of India resulting in legal battle between the two partners.

While OMC had filed a case in the Odisha High Court in 2003 seeking cancellation of the JV agreement, Rio Tinto had approached the Company Law Board of India contesting the OMC's plan. Meanwhile, the state owned National Mineral Development Corporation (NMDC) which originally got lease over Malangtoli mines Keonjhar-Sundargarh belt in 1977, raised objections to OMC-Rio Tinto pact seeking its share in the JV. The Centre had allocated Malangtoli mines in favour of OMC in 1992 after NMDC failed to explore the iron ore from the reserve. Considering NMDC’s claim that it had undertaken drilling and other activities at Malangtoli mines, it was given five per cent share from the OMC’s 49 per cent stake in the JV following which a tripartite agreement was signed between the OMC, NMDC and Rio Tinto in 2000.