The first sale of 160,000 tonnes to Essar Steel will be loaded onto the Genco Claudius at Dampier in late December, bound for Hazira port in Gujarat state in western India.

The shipment has been bought at spot.

It is understood Essar has expressed interest in securing up to 3 million tonnes from Rio Tinto and the miner has agreed to see if something can be arranged.

Rio Tinto Iron Ore chief executive Sam Walsh returned from a trip to India on Monday with the Essar news.

What makes the sale so special is the fact that while India has a strong steel industry, it also is a net exporter of iron ore. It exported 106Mt of iron ore in 2008-09, with the bulk going to China.

According to a Federation of Indian Mineral Industries note, India still had a 50Mt surplus of iron after meeting its export responsibilities in 2007-08.

However, the note says, India’s Ministry of Steel has projected steel production to reach 120Mt in 2015-16 and 180-200Mt by 2019-2020.

Walsh said that, while this was only one shipment, it was 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,” he said.

“It 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 Tinto’s Pilbara operations are back to full capacity with repairs recently completed to the Hamersley and Deepdale lines, which were damaged by floods in February.