Orissa may enter into a fresh pact with Rio Tinto

Setting aside its long standing dispute with Rio Tinto over formation of a billion dollar joint venture to mine iron ore in the state, Orissa government today said it is considering a fresh agreement with the global mining major.

"Orissa government will take a final decision on making a fresh agreement with Rio Tinto keeping in view the state's interest," Steel and Mines Minister Raghunath Mohanty informed the assembly while replying to a question.

Stating that the state-owned Orissa Mining Corporation (OMC) had signed an agreement with Anglo-Australian mining company Rio Tinto way back in 1995 but it could not be implemented, he said a draft for the fresh agreement is being examined by Law and Finance departments.

"The company is holding discussion with the state government officials to resolve the dispute," a Rio Tinto India official said, adding they are hopeful of starting afresh after a gap of one-and-a-half decade.

Both Rio Tinto and OMC had initially formed a joint venture company named Rio Tinto Orissa Mining to start exploration of iron ore at Malangtoli reserve. While Rio Tinto had 51 per cent stake in the JV, OMC held 49 per cent share.

However, the state owned NMDC, which originally got lease over Malangtoli mines Keonjhar-Sundargarh belt in 1977, raised objection seeking its share in the JV. The centre 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 5 per cent share from the OMC's 49 per cent following which a tripartite agreement was signed between the OMC, NMDC and Rio Tinto in 2000.

However, the project could not take off due to different reasons, including a proposal like direct export of iron ore, forcing the OMC to seek winding up the JV as per the advice of the Solicitor General of India.

While the state PSU moved Orissa High Court seeking winding up of the JV, Rio Tinto approached the company law board (CLB) against OMC's decision.

While the petitions filed by OMC and Rio Tinto were still pending for disposal, both the parties seemed eager to settle the matter out of court, sources said.

In its bid to go for a fresh agreement, the state government formed a task force headed by the chief secretary in August 2007. The Task Force had asked the OMC to make a draft of the fresh agreement, which is being examined by departments of Law and Finance before entering into a new agreement.