(From left) Chief minister Naveen Patnaik, Governor M.C. Bhandare and Union minister of state for mines T. Subbarami Reddy at a meeting on Indian industrial growth. Picture by Sanjib Mukherjee

Bhubaneswar, Sept. 21: World’s second largest exporter of iron ore — Rio Tinto — today began fresh negotiations with the Orissa government for mining and exploration leases.

The UK-based global exporter of iron ore also handled copper, coal, diamond, aluminium and gold exports. The firm had previously entered into a joint venture with state-owned Orissa Mining Corporation (OMC) to develop two mines in 1995. The venture fell through later.

Then, Rio Tinto was involved in Gandhamardan and Malangtuli mines where it was planning to set up an integrated project of 15million TPA at an estimated cost of $800 to $900 million.

The project required leases, for both the mines, a dedicated rail link to Paradip port and the port’s further development to support trade.

However, the project fell through when its key issues — such as clearance of Malangtuli mining lease, clearance of rail and port development projects and direct export of iron ore — remained unresolved between the firm and the Indian government.

“The negotiations and collaborations, as well as the terms and conditions of the joint venture agreement were discussed at a meeting,” conceded state’s steel and mines secretary UP Singh. Company officials also discussed the issue with a committee headed by chief secretary Ajit Tripathy at the state secretariat.

According the previous agreement, Rio Tinto was supposed to hold 51 per cent stake in the company, while its partner OMC held 44 per cent stake along with National Mineral Development Corporation who had a hold over the remaining 5 per cent.

“Orissa, even now, is not interested to expand the port or to lay a railway line, as there are plans of all-weather ports in the pipeline.

“Hence, the negotiation was held only for mining and exploration activities this time,” said Singh.

The proposed project would produce ore annually for domestic sale as well as exports.

Orissa, which has one-third of the nation’s iron reserves, has received about 50 applications for steel plants in the state. The new liberalisation policy in the mining sector of the Government of India would open further doors for foreign investors in Orissa.

Reputed foreign firms such as Continental Resources Limited of Canada and Empire Gold Mines besides Rio Tinto have entered into joint venture agreements with OMC.

Others like De Beers and Ashton have also shown interest to enter into joint ventures with the state.

Orissa has 97 per cent of the chromite, 71 per cent of the bauxite, 33 per cent of the iron and 32 per cent of the manganese resources in India.