Australian mining major Rio Tinto Group, also the world's third biggest mining company, is set to infuse some $2 billion into its Orissa iron ore project venture in India amid reports the country's local steel demand alone will balloon by 9 per cent annually over the next five years.

Rio Tinto's foray into India has been accepted as a much welcome news as India has been struggling with an iron ore supply shortage. Apart from Orissa, India has a huge potential in low-grade ores in Jharkhand, Chattisgarh, Maharasthra, Goa and Karnataka. But exploration efforts have been highly inadequate, as well as harder to develop and sustain, because of regulatory risks and struggles involving land acquisitions, displacement of locals and environmental clearances. Almost all those major iron ore belts have been exploited for high- and medium-grade iron ores over the last six decades.

"We will go through all the processes needed to bring this project on board. We are already working with local communities," Sam Walsh, Rio Tinto's chief executive, iron ore group, told reporters on Monday on the sidelines of the Australia-India Chief Executive Officers' Forum in New Delhi.

The joint venture, touted as of the biggest overseas investments by an Australian mining company in India so far, aims to produce 15 million metric tonnes of iron ore once the project goes online. Rio Tinto majority controls the Orissa iron ore project venture at 51 per cent, while other venture partner Odisha Mining Corp. owns 44 per cent. The remaining 5 per cent is controlled by NMDC Ltd., India's biggest iron ore producer.

The Orissa iron ore project venture covers three iron ore deposits, including Sakradihi Dubna, Malangtoli and Gandhamardan. Total mineral reserve has been placed at about 3.6 billion tonnes, the Zee News Limited reported.

Data from the Indian trade ministry showed total foreign direct investment (FDI) from Australia to India from April 2000 till December 2011 stood at $486.5 million, just 0.3 per cent of the country's total FDI flows, according to www.livemint.com.

"Foreign companies are looking ahead to opportunities opening up in the Indian mining sector, especially as there is a new mining policy on the anvil," www.livemint.com quoted an unidentified Delhi-based steel and mining consultant. "Rio Tinto has been in India for many years and is engaged in exploration and reconnaissance projects and is looking for mining leases. It is not surprising, therefore, that it is seeking to strengthen its position by announcing this investment."

Very much aware of India's complex procedures in getting regulatory approvals to jump start their joint venture project, Rio Tinto said is it willing to wait to undergo what is needed to see the fruition of the project.

"We would like to see the birth of this project. We will bring the technology and environment safety system and we will obviously be using the local people in the project," Walsh said.

India's iron ore output may slid 50 per cent this year from 226 metric tonnes mined in the year ended March after the government raised levies. Date from the Indian Bureau of Mines and Federation of Indian Mineral Industries showed the country's total recoverable reserves are about 7.06 billion tonnes.