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Evacuation of iron ore -- Rio Tinto-OMC venture studying port options

Santanu Sanyal

CALCUTTA, Dec. 8

RIO Tinto, the Anglo-Australian mining conglomerate planning to develop an integrated mining complex at Gandhamardan and Malanjtoli areas of Orissa in partnership with the Orissa Mining Corporation (OMC) of the Orissa Government, has two options for the evacuation of iron ore through either the Paradip port or the Dhamra port.

While Paradip is a functioning port, Dhamra -- proposed to be developed by the Singapore-based International Seaports Pte Ltd (ISPL), the joint venture of SSA of the US, L&T of India and Precious Shipping of Thailand -- is expected to be ready in three t o four years.

Rio Tinto Orissa Mining Ltd, to be owned 51 per cent by Rio Tinto and 49 per cent by OMC, is considering the relative merits of the two ports. The Paradip port already has the infrastructure and experience in handling iron ore cargo.

Moreover, there is a commitment from the Paradip Port Trust (PPT) to make available a deep-draft berth with 17 to 18 m draft throughout the year to facilitate the movement of ships of 2,00,000-dwt capacity each.

``We have already told Rio Tinto that this will be the best for their purpose'', said the PPT Chairman, Mr S.K. Mohapatra, while talking to Business Line at Paradip recently.

The work on the Dhamra port, on the other hand, is yet to begin. The partners of the promoting company, ISPL, are believed to be having some problems among themselves.

However, the Orissa Government, it appears, is very hopeful of the implementation of the project at the earliest possible. ``On our part, we are doing everything to expedite the implementation'', said a spokesman for the Orissa Government while talking t o Business Line in Bhubaneswar recently. ``We are keen that Rio Tinto, as it begins production in 2006/2007, guarantees a minimum of five million tonnes of cargo for the Dhamra port'', the spokesman added.

Rio Tinto-Orissa Mining's iron ore venture will produce 25 million tonnes of ore in the fifth year of production even while it will have the capacity to lift output up to 50 million tonnes.

As the joint venture debates the suitability of using one of the two ports, the Indian Railways has told Rio Tinto to consider having a separate joint venture with it to build and operate a 250-km long railway system linking Daitari with the port.

Rio Tinto's original plan was to have a captive railway system but the Indian Government does not extend the facility to any private firm -- Indian or foreign.

The ore deposit at Gandhamardan/Malanjtoli areas in Orissa is estimated at 800 million tonnes. The project proposal is for selling 50 per cent of ore production in the world market and the balance in the domestic market where the principal buyers will be the new steel capacities created in recent years.