Rio Tinto in talks to develop iron ore in India

Rio Tinto in talks to develop iron ore in India

Kolkata: Rio Tinto India is in talks with an Indian company to develop iron ore mines, a senior company official said, underscoring continued foreign interest in Indian mining despite social opposition and regulatory hassles.

“We are very keen to have iron ore operations in India," Siddharth Jain, general manager-iron ore, Rio Tinto in India, said on Monday.

Jain, who was speaking at a steel raw materials conference, did not identify the Indian company or the location of the mines.

Iron ore is a key raw material in steel making, and demand for steel is expected to grow in double-digits in India, driven by surging construction of buildings and infrastructure and huge investments by global carmakers.

Rio Tinto is also in the final stages of re-negotiating an old agreement with state-owned Orissa Mining Corporation (OMC) with which it has a mining project, with a 51% stake.

“In 1995, we had the main agreement for pre-feasibility work with OMC. The subsequent agreement is being re-negotiated and is waiting for government approvals."

After signing of the final agreement, it would take the joint venture 20 months to begin mining in the Keonjhar district in eastern Orissa state, Jain said.

He said there are possibilities of importing the steel-making raw material into India as iron ore available locally has high alumina content, which will need to be blended with higher grade ores from the overseas market.

In December 2009, India’s Essar Steel had bought iron ore from Rio Tinto, when supplies from a local mine got disrupted.

Speaking on the federal government’s new mining bill, under which the government wants miners to pay 26% of their net profit to displaced locals, Jain said: “the principle is understandable but it is the level being put out which is of concern."

India’s metal and mining companies have found it difficult to expand to keep pace with rising demand owing to opposition from displaced locals as well as the slow process for getting approvals and stringent environmental norms.