The possibility of revival of the $1 billion jinxed joint venture (JV) project between Orissa Mining Corporation (OMC) and Anglo Australian mining major Rio Tinto appears murky with the state still dithering on the matter.
Though a revised JV pact was prepared after several rounds of negotiation between the once sparring JV partners, nothing has moved forward in the past one year.
“There has been absolutely no progress on the project for the past one year. The matter is pending at the government level,” said a top official of OMC.
“The fate of the project hinges on the decision to be taken by the government. The revival of the JV does not look bright at this stage,” he said.
A top Rio Tinto executive on Tuesday called on the state Chief Secretary B K Patnaik, understandably to discuss possibility of the project revival.
“There were discussions on the iron ore mining project to be taken up jointly by OMC and Rio Tinto. The project was proposed several years back but we haven't decided anything on revival of the JV,” said Patnaik, after a meeting with Sam Walsh, chief executive (iron ore), Rio Tinto.
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As per the original JV pact signed between OMC an Rio Tinto, both partners had agreed to export 50 per cent of the mined iron ore while setting aside remaining 50 per cent for domestic consumption.
However, the state government's thrust on meeting iron ore demand for local industries instead of exports seemed to have put the brakes on the revival plan. Chief Minister Naveen Patnaik had recently urged the Centre to ban iron ore exports.
It may be noted that the Orissa government had constituted a task force in 2007 under the chairmanship of the Chief Secretary to look into the renewal of JV agreement between OMC and Rio Tinto.
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 in Orissa with a mining capacity of 25 million tonnes per annum.
However, the project could not take off due to different reasons including slump in the iron ore market and proposal for direct export of iron ore, prompting the OMC later to seek winding up of the JV as per advice of the Solicitor General of India.
This sparked off a legal battle between the two parties. While OMC had filed a case in the Orissa High Court to wind up the JV agreement, Rio Tinto had approached the Company Law Board of India to contest OMC's claim.
Even as 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.
As per the original pact, Rio Tinto was to hold 51 per cent equity in the JV while OMC would own the balance 49 per cent.