March 6 (Bloomberg) -- Rio Tinto Group, the world’s third-biggest mining company, will invest in a $2 billion iron ore venture in India to tap demand for the steelmaking raw material, said Nik Senapati, managing director of the local unit.
Rio Tinto owns 51 percent of the project that seeks to produce 15 million metric tons annually in the eastern state of Odisha, according to the website of partner Odisha Mining Corp., which holds 44 percent. The remaining 5 percent is owned by NMDC Ltd., India’s biggest iron ore producer.
India’s steel ministry in November estimated local demand may grow at 9 percent a year over the next five years. While Tata Steel Ltd. and Steel Authority of India Ltd., the nation’s biggest producers, own iron ore mines, JSW Steel Ltd., the third-largest producer, buys as much as 80 percent of its needs from local and overseas suppliers.
“With expectations of significant infrastructure and industrial growth in India, Rio Tinto remains keen to contribute to the development of the Indian iron ore sector,” Rio Tinto said on its website.
A separate venture between Rio Tinto and NMDC was stalled in 2010 after the companies failed to make “headway because of a lack of synergy,” Rana Som, the then chairman at the Hyderabad-based company, said on Dec. 21.
Government delays and protests by farmers unwilling to vacate state-owned land have stalled initiatives by overseas steelmakers and mining companies to develop projects in India. Proposed steel plants in India by ArcelorMittal and Posco have languished for more than six years, while Vedanta Resources Plc’s bid to develop a bauxite mine and expand its alumina smelter in Odisha has been stalled pending environmental clearances.
India’s iron ore output may tumble 50 percent this year from 226 million tons mined in the year ended March 31 after the government raised levies, R.K. Sharma, secretary general at the Federation of Indian Mineral Industries, said on Jan. 2. The country’s total recoverable reserves are about 7.06 billion tons, according to the Indian Bureau of Mines and Federation of Indian Mineral Industries Ltd.
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