Rio Tinto has agreed to ship over 150 000 tonnes of iron ore to Indian steel maker Essar.  

Scheduled for shipment in late December, the ore “is only one shipment at this stage but this is very significant in terms of forging a relationship with Essar, and potentially opening doors," Rio chief executive Sam Walsh said.

Rio has “long believed that India is a long-term market of great potential and this development should be seen in that context,” Walsh added.

Walsh went on to say that is also potentially significant given our iron ore project in Orissa, which we expect will also be a source to supply the growing Indian market.

Rio holds 51% stake in iron ore mining projects in the eastern Indian state of Orissa.

It is understood that Essar has expressed interest in potentially securing up to three million tonnes of iron ore from Rio Tinto, with the possibility of further agreements between the two to be explored in the future, a source familiar with the situation said.

The Pilbara Blend Fines iron ore was bought a spot price, with Walsh commenting that “it is the equivalent if we had shipped into China on a spot basis."