A 17-year-old agreement to develop about $2 billion worth in iron ore deposits in the Indian region of in Odisha between, mining giant Rio Tinto (LON,NYSE:RIO) and state-own Odisha Mining Corporation (OMC), is about to be nothing but history.
The Indian company, which mines for iron, chrome ores, manganese, granite and gems, told Business Standard Friday they are not longer keen “to revive a project that hardly showed any sign of taking off the ground.”
"The JV pact with Rio Tinto presently stands null and void and OMC is no longer willing to revive the project. We have already informed the state government regarding our intent. It is now going to be the government's call whether it wants to renew the project or not,” Saswat Mishra, OMC’s chairman and managing director, was quoted as saying.
When Rio Tinto entered into a JV with OMC back in 1995 to develop two iron ore deposits in Odisha, with a total reserve of about 3.6 billion tonnes, the situation was very different. The demand for iron ore in the domestic market was moderate and the Indian company was struggling.
Today iron ore demand is growing locally and internationally, said Mishra, and OMC has a cash surplus.
If development goes ahead, the deposits would have been the largest foreign direct investment (FDI) ever in India.