The Odisha State Government in India has decided to cancel its $1bn joint venture (JV) project with mining major Rio Tinto.
Rio Tinto established the JV with the state-owned Odisha Mining Corporation (OMC) and National Mineral Development Corporation (NMDC) in 1995, in order to develop the Gandhamardhan and Malangtoli iron ore deposits in Odisha.
Go deeper with GlobalData
The project had a mining capacity of 25 million tonnes (Mt) a year and included development of leases in the Keonjhar and Sundergarh districts.
Disputes between the companies arose as Rio Tinto planned to export 50% of the iron ore produced while OMC earmarked it for domestic use.
The changed dynamics in the iron ore industry have prompted OMC to scrap the project with the mining company, reported the Business Standard.
See Also:
OMC had been experiencing cash difficulties when it signed the JV agreement, but now a surplus of around Rs50bn.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataIt is believed that the project has made no progression since the deal was made and that, following disagreements, the partnership became strained and a legal battle ensued.
In 2003, OMC filed a case in the Odisha High Court to end the agreement, while Rio Tinto approached the Company Law Board of India.
Under the terms of the original agreement, Rio Tinto was to hold 51% equity in the JV.
NMDC was given a 5% share from OMC’s 49%, creating a tripartite agreement between the three companies, signed in 2000.
