Rio Tinto to make first iron ore shipment in India, to Essar

Anglo-Australian mining major Rio Tinto today said it would make its first-ever sale of iron ore in India, to Essar Steel.

“This is only one shipment at this stage, but this is very significant in terms of forging a relationship with Essar and potentially opening doors,” Rio Tinto’s chief executive iron ore, Sam Walsh, said in an e-mailed statement to PTI.

“We have long believed that India is a long-term market of great potential, and this development should be seen in that context. It is also potentially significant given our iron ore project in Orissa, which we expect will also be a source to supply the growing Indian market,” Walsh added. This is the first ever sale to India from Rio Tinto’s Pilbara mine in Australia, the company said.

“There will be a shipment arriving there (India) in December,” Walsh said.

An Essar Steel spokesperson said the company was expanding its annual production capacity to 10 million tonnes by next year and would need more iron ore to feed the augmented line.

“Essar Steel is the in the process of commissioning its new assets for increasing steel production capacity from 4.6 million tonnes per annum to 10 million tonnes per annum. To optimise operations of these units and expeditiously ramp up the capacity, iron ore from international sources is being considered,” the spokesperson said. Rio Tinto is understood to supply about 160,000 tonnes of iron ore to Essar Steel in the shipment. The price at which Essar Steel will be buying the iron ore could not be immediately ascertained.

Essar spokesperson added that the possible sourcing of iron ore from abroad would be in addition to iron ore it gets under contract with domestic suppliers. Moreover, Essar also has captive reserves in the country. The company has also floated a subsidiary to scout for such reserves overseas.

Essar Steel, which has a six-million tonne iron ore supply contract with state-run NMDC for the current year, is facing mineral shortage on account of disruption in 274-km long pipeline carrying the raw material.

The 274-km long Bailadila- (Chhattisgarh)-Vizag (Andhra Pradesh) pipeline of Essar Steel was blown up allegedly by the Maoists, in May.