Rio Tinto makes first iron ore sale to India

Rio Tinto makes first iron ore sale to India

Sydney/Mumbai: Rio Tinto Ltd has made its first sale of iron ore from its mines in Australia to India, potentially opening doors in a major exporter of the steel-making raw material that is busy ramping up its steel capacity.

The sale of 160,000 tonnes to Essar Steel Ltd, while small, is unusual as India very rarely imports iron ore, with Indian traders saying the timing could be linked to problems with output in the country’s top iron ore producing state, Orissa.

“This is a landmark development both for Rio and India even though it’s for only a small amount of iron ore," said DJ Carmichael analyst James Wilson.

“If the 160,000 tonnes turns into 3 million tonnes, then goes up from there, Rio’s got a strong foothold in a market that will eventually need to import more raw materials to support its growth, not unlike China."

Essar said the iron ore was needed as the company expands its steel capacity to 10 million tonnes from 4.6 million tonnes, but a spokesman but did not say if the firm would be importing more in the near future.

The bulk of Australian iron ore traditionally goes to steel markets in Japan, South Korea, Taiwan and increasingly China, which represents the greatest growth market for Rio.

“This is only one shipment at this stage, but this is very significant in terms of forging a relationship with Essar," Rio’s iron ore division chief, Sam Walsh, said in a statement.

An Indian iron ore dealer and a metals analyst said the imports could be temporary to tide over a supply shortage.

“The scope for imports is good, but it is not as if we will turn into a net importer overnight," said a dealer in a large international trading company in New Delhi. Reuters