‘Our focus is the diamond jewellery and gifting market, which has a potential of $2-3 billion’

Anglo-Australian firm Rio Tinto is enthusiastic about the opportunities India has to offer even as its prime mining project...

Written by Shruti Srivastava | Published: December 11, 2014 1:37 am

Anglo-Australian firm Rio Tinto is enthusiastic about the opportunities India has to offer even as its prime mining project, Bunder, in Madhya Pradesh has run into the clearance hurdle. The company is betting big on the diamond and jewellery gifting market, and is hopeful of getting environmental clearances for its project by next year. Jean Marc Lieberherr, managing director-diamonds, Rio Tinto, in an interview with Shruti Srivastava, elaborates on the company’s plan, regulatory hurdles and what India needs to do to revive the mining sector. Excerpts:

What are Rio Tinto’s plans for India? 

We have been here for 30 years already. We started working with Indian diamond industry in 1984 and at that time there was a huge increase in world production.

There were diamonds which were not cut and polished anywhere. So together with Indian manufacturing sector we developed capabilities and a market for the US.

Now our focus is the local market. We are working in close partnership with our customers, 80 per cent of which are Indian companies, with manufacturers and retailers to develop the diamond and jewellery gifting market in India which we think has huge potential, at least say of $2-3 billion. Our brand is called Nazrana and although owned by us, is handled and distributed by a network of partners. It is a really interesting business model for the diamond industry that can be replicated elsewhere.

The next area of focus is the diamond mining project in Chhatarpur in Madhya Pradesh where we have been working for the past 10 years, trying to bring to production the biggest diamond deposits found in over 10 years. We are at the stage of securing the necessary environmental clearances and we hope this is going to happen next year.

This will open the way for us in securing the mining lease and production can begin in early 2020 or 2021. We have already invested $90 million in the project and we have done a lot of work with the community in terms of drinking water, irrigation or education.

The project is facing stiff resistance from the local community while there are environmental concerns too. What is your strategy to tackle it?

For any project like this, there will be a minority that will protest. Some may have genuine concerns, they need to be handled and addressed. Some of them are political, that is a fact of life. We work with everybody, we are trying to find support and I think we have been getting huge support from the majority of the community. We are employing 300 people. We have been through the gram sabha process and they have been very successful.

There were reports that you have cut down capex …

We have been here for 10 years. We have been making the investment which is gate to production. But, for example, if you are investment in training, you are going to phase your investment based on when you are going to need the resources. If you think its going to take you longer, obviously you will push back your investment, else you will be training people to do nothing. I think its natural. Our commitment is intact. Its just the phasing of investment.

What are the challenges the mining sector faces in India and what are your expectations from the new government?

There is a huge hope with the present government. The understanding of Mr Modi of the diamond sector, and its importance is very encouraging. However, to make the business more effective and successful, the mining sector needs to made more investor-friendly.

Anything that can go in the direction of making the complicated and cumbersome approval process simple will be good for investment. Further, today you can’t transfer a lease licence for profit which is a problem. This restricts the appetite of people to invest. We are very confident that the current government will resolve the issues.

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