Rio Tinto has agreed to sell iron ore to India for the first time.

The cargo was loaded on the Genco Claudius ship at Dampier in late-December, for shipment to the Hazira port in Gujarat for unloading. About 160kt of the ore from from Rio’s Pilbara Blend Fines in Western Australia, is destined for Essar Steel.

Rio’s iron ore chief Sam Walsh said: “This is only one shipment at this stage, it is very significant in terms of forging a relationship with Essar, and potentially opening doors.

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

Mr Walsh said the sale was also significant for Rio’s plans to launch iron ore operations in Orissa state, where it has a 51% stake in a joint venture with state-owned Orissa Mining Corp.

India, the world’s third largest producer of iron ore is facing a severe shortage of supplies from Orissa, where the government has been taking action against illegal mining. Orissa had produced 70Mt of iron ore out of India’s 222Mt total production last year.