Global metals & mining major Rio Tinto said it was not keen on exporting iron ore to be produced from its proposed mining project in Odisha, maintaining that its priority was to cater to raw material needs of local industries.
Rio Tinto was to take up the $2 billion iron ore mining project in the state jointly with Odisha Mining Corporation (OMC). In the original joint venture in which Rio Tinto had 51 per cent stake, there was a clause providing for 50 per cent export of the ore. This condition had emerged as the bone of contention between the two JV partners as OMC's priority was to meet iron ore needs of local end-use plants.
“Our priority is to meet the iron ore requirement of local industries. Export of ore is not our focus area”, Sam Walsh, chief executive (iron ore), Rio Tinto said here when asked if the company agreed not to export ore mined from its Odisha project.
The fate of Rio Tinto's Odisha project was almost sealed after its Indian partner OMC said recently it was no longer keen to pursue the project.
Walsh, however, said if the joint venture materializes, it would be a win-win situation for both the JV partners. He called on state chief secretary B K Patnaik on Saturday and was accompanied by Peter N Varghese, the Australian High Commissioner to India.
“We had a meeting with the chief secretary. He informed us that the matter relating to Rio Tinto's JV with OMC will be looked into. The chief secretary said that issues like the pending mine legislation and ongoing probe by the Shah Commission of enquiry will influence the state government's decision”, said Varghese.
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 respectively in Odisha with a mining capacity of 25 million tonnes per annum.
Seventeen years after it inked a joint venture pact with the Anglo Australian mining major, OMC has said that it is no longer keen to revive the project that hardly showed any sign of taking off the ground. OMC had already submitted a proposal agreed upon by its board of directors, that is no longer keen on the JV project given the changed dynamics of iron ore market and also the corporation's financial position.
The ambitious mining project had run into rough weather due to intractable differences between the partners. While Rio Tinto was keen to export half of the iron ore mined, OMC emphasized on meeting raw material needs of local industries, 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 Odisha High Court in 2003 to wind up the JV agreement, Rio Tinto had approached the Company Law Board of India to contest OMC's claim.
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.
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 had 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 five 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.
