“ENGAGING INDIA BEYOND BUNDER DIAMOND PROJECT”
In an interview with
JAYAJIT DASH, Iyer says a predictable, transparent policy system is needed to help uncover India’s full mineral potential
For Rio Tinto, not pursuing the prized Bunder diamond project in Madhya Pradesh was a difficult pill to swallow. However, S VIJAY IYER, managing director, Rio Tinto India, believes the country has more to offer. He is also upbeat on the India growth story. Edited excerpts of an interview by Jayajit Dash: watching the progress with keen interest. Rio Tinto recently made an announcement around the future of its diamond project in Bunder. What prompted that decision? As part of our ongoing efforts to drive shareholder value by conserving cash and cutting costs across our business, we have decided not to proceed with the Bunder project. Accordingly, we will be seeking to close all project infrastructure by the end of the current year. It was a difficult decision. Rio Tinto firmly believes the Bunder deposit is a high-quality discovery, and we will work with the government to explore options for a third-party investor to carry forward the project.
Our relationship with the Indian diamond industry continues to thrive, with 250,000 cutters and polishers employed in processing Rio Tinto diamonds. We remain committed to India as an important market for our metals and minerals, and as a key global hub for Rio Tinto’s shared services delivery. We expect to expand our footprint here. What is your outlook on commodity demand and its impact on India? Looking at the world economy, global growth remains reasonable. While there has been a pick-up in China this year there is little doubt the markets will remain challenging and volatile in the short to medium term. India is one of the fastest growing economies globally and an important market for our products. We expect that the resource intensity of India’s growth composition will increase as the country moves ahead to close the infrastructure gap and enhances the size of its manufacturing sector.
The success of such programmes as ‘Make in India’, along with the removal of bottlenecks in the infrastructure space, will be crucial elements to the sustainability of the growth prospects. These are important areas of policy and procedural transformation to promote growth and business activity.
India’s favourable demographic profile could sustain a growing middle class and drive higher urbanisation rates, both of which will be important triggers for consumption growth. The India growth story potentially benefits from both investment and consumption impulses, with the prospect to drive commodity demand across the board. We are enthused by the focus of the current government in these areas – manufacturing, infrastructure, skilling of its human capital. For a company like Rio Tinto, we build our business on the long-term fundamentals over many years, and there is little argument that the long-term demand story for our products remains strong.