Anglo-Australian mining giant Rio Tinto said Thursday it had secured its first-ever iron ore sale to India, a “ground-breaking” development it described as significant for its future.

Iron ore chief Sam Walsh said Rio had sold a 160,000 metric-ton shipment to Indian steelmaker Essar for delivery later this month.

“To me, this is a ground-breaking sale and I think it is a good signal for us and Western Australia– it is strategic for us,” Walsh told Dow Jones Newswires.

“This is only one shipment at this stage but this 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,” he added.

Walsh said the sale, which was made at international spot rates, was also significant for its plans to launch iron ore operations in Orissa state, where it has a 51 percent stake in a joint venture with state-owned Orissa Mining Corp.

“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,” Walsh said.

He did not confirm reports that the shipment was part of a request from Essar for up to three million tons of iron ore.

The Indian steelmaker downplayed the move as a short-term arrangement to meet demand as it expanded production capacity.

“In order to … expeditiously ramp up the capacity, iron ore from international sources is being considered,” an Essar spokesman told AFP.

“This is in addition to iron ore supplies under contract with domestic suppliers.”

Essar’s production was more than halved when Maoist rebels blew up a mining pipeline supplying its pellet-making plant in the southern city of Vizag in May, Dow Jones said, citing mining officials.

ANZ senior commodities strategist Mark Pervan said more competitive prices and greater ore quality were likely to have led India, the world’s second-largest consumer of iron ore, to look to Australian producers.

But he was dubious about the longer-term implications of the sale, saying India was never going to compete with net importers such as China, Japan and Korea.

“India is a very big iron ore producer of its own and traditionally an iron ore exporter … and by default it should be supporting all of its own needs,” Pervan told AFP.

“It’s significant in that India is going to foster a very large steel industry and therefore demand a lot of iron ore. But it’s probably almost always going to be sourced from its domestic supply.”

The world’s second-largest producer of iron ore, Rio’s chief export market is fast-industrialising China, but emerging India is also expected to underpin a boom in demand for resources.

Australian officials have forecast a “decades-long” return to stellar growth fuelled by demand for commodities from developing nations.

The world’s largest miner BHP Billiton, which agreed this month to combine Western Australia iron ore operations with Rio, has said it expects global steel demand to double in 15 years.

India would partly underpin a 250 percent increase in seaborne iron ore demand by 2025, and was also expected to intensely consume energy and coking coal, BHP said.