Rio Tinto and the government of Madhya Pradesh have signed a State Support Agreement that will facilitate the diamond company's progress on its most advanced diamond project in India, financial and commodity news outlets report.

Regional exploration in Madhya Pradesh in 2004 revealed the presence of diamonds. A subsequent study at the Bunder Project estimated the project's diamondiferous content at some 27.4 million carats, which prompted Rio Tinto to apply for a diamond mining lease and build a sample processing plant.

Nik Senapati, Managing Director of Rio Tinto India, called the mineral potential of Madhya Pradesh "significant" and noted that the State Support Agreement for the Bunder project, signed between the mining company and the chief minister of Madhya Pradesh, was a "milestone in our journey to unlock this potential by developing a world-class diamond mine."

Cost estimates for developing a mine at the Bunder site stand at some $500 million, but once a mine begins production, Madhya Pradesh could rank among the world's top 10 diamond producing regions.