In what will become Australia’s largest investment in the Indian mining industry, international mining giant Rio Tinto will invest $2 billion in an iron ore project in the country’s east. The project in mineral-rich Orissa is set to supply Rio Tinto’s customers both in India and overseas.
Rio Tinto says huge difficulties encountered by other metals companies attempting to attain approval for projects in India has not fazed its investment team.
The company’s chief of global iron ore operations, Sam Walsh, says “We will go through all the (legal) processes. We are already working with the local community.”
Industrialization has been championed by the Indian government as a way to drive growth and pull millions out of poverty but industrial projects have often created battlegrounds between local groups and companies.
South Korean steel giant POSCO announced plans in 2005 to build a plant in Orissa, but is yet to have implemented them in the face of wide opposition from locals campaigning to save farmland and forests. Steelmaker ArcelorMittal, controlled by Indian billionaire Lakshmi Mittal, has also been unable to acquire land for a proposed plant.
“We would bring our environment and safety systems and obviously we would use local people,” Sam Walsh said.
He attended a meeting of Australian and Indian business leaders in New Delhi earlier this month discussing ways to clinch a free trade deal between the two countries. Australian trucking billionaire Lindsay Fox, who was at the same forum, said the advantages of liberalizing trade between India and Australia were ‘obvious’.
India and Australia launched talks last year on a free trade deal that would broaden the base of merchandise trade and remove barriers to services trade. Bilateral trade between the two countries has been growing by 20% a year for the past five years to Aus$23 billion, with the two countries aiming to double trade to Aus$40 billion by 2017.