Friday, April 8, 2011

Rio Tinto (RIO) in New Deal with India

Rio Tinto (NYSE:RIO) has received permission to launch mining activities in India, with the government granting a proposal for a new agreement.

State-run Orissa Minerals Development Company (OMDC), has been in discussions with Rio Tinto for a joint venture in the state for a long time.

Orissa state steel and mines minister Raghunath Mohanty confirmed that a new agreement is now in place.

The deal entails the entire value chain, from prospecting and development to extraction. OMC will use Rio Tinto's expertise for mining its reserves in Orissa.

A joint venture company named Rio Tinto Orissa Mineral was formed for the exploration of 15 million tons of iron ore per year from the Gandhamardan and Malangtoli mines.

OMC has access to almost 206 million tons of iron ore reserves and 44 million tons of manganese ore reserves spread across six mines aggregating 4,365.262 hectares in Barbil of Orissa's Keonjhar district.

Rio Tinto also plans to invest a significant amount in Madhya Pradesh for mining diamonds there.

Rio Tinto had begun exploring for diamonds across a number of sites in India in the mid-1990s. In 2004, the company had located some finds in the Bunder area.

During drilling and prospecting at Bunder in Madhya Pradesh, the company discovered a web of pipes which it claims could hold the biggest diamond find in the world in the last decade.

Analysts say this translates to an annual value of roughs in the region of $300 million, assuming a life span of 15 years for the mine.

Rio Tinto closed in New York Thursday at $72.42, falling $0.55, or 0.75 percent.

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