NMDC/Rio Tinto JV stalled

By: Ajoy K Das
26th June 2012
KOLKATA (miningweekly.com) - Attempts to revive a joint venture (JV) proposal between India’s largest iron-ore miner NMDC and diversified giant Rio Tinto has made little headway owing to the differing long-term strategic goals of the two miners, senior official in India’s Mines Ministry said.

NMDC’s strategic plan was to acquire mineral assets overseas to meet growing raw material demand within the country, and the company expected that an alliance with Rio would facilitate its entry into Australia, the official said.

NMDC’s overseas ambitions received a setback when it was dropped as a JV partner by ASX-listed Minemakers in the development of its Wonrah rock phosphate reserves. It was reasoned that with a global miner as an ally, this could have been prevented, he added.

Meanwhile, Rio’s declared strategic objective was to be the first diversified global miner to mark its footprint in India, particularly in iron-ore mining, offering technology and sustainable mining best practices in the highly fragmented mining sector.

“India was yet to develop diversified mining conglomerates and this was cause of rather unorganizsd nature of domestic mining sector. But unless global mining majors were offered a portfolio of business opportunities, single project JVs may not be feasible,” the official said.

NMDC and Rio signed a memorandum of understanding (MoU) in 2008, to set up a 50:50 JV to identify mineral resource and developmental projects overseas and within India. The agreement lapsed in 2011 without any progress made by the two companies.

Rio’s Indian interests goes way back in 1996/5 when it signed an agreement for a JV with Orissa Mining Corporation, an mineral asset development arm of the provincial government of Orissa, for development of iron-ore mines at an investment then estimated at $1-billion. This venture too did not fructify in face of litigations.

However, India continued to be on Rio’s radar . In March 2012, the mining major set up the Innovation Centre for Mining Excellence, in collaboration with information technology partner iGate Patni, in Pune, Maharasthra.

The miner’s India plan was to have RTIC work with Rio’s other centres of excellence in Australia, Canada and the UK to offer technologies to the Indian mining sector.

Edited by: Esmarie Swanepoel