China's Sino Iron project a challenging investment, says Emerson Process Management

Emerson Director of the Mining and Power Industries Alan Novak has provided an update on China’s mining investments outside its borders.

According to the recent Wall Street Journal article ‘China Rethinks Deals for Resources’, China may be rethinking its investment in large foreign natural resources projects due to challenges faced by Chinese owner Citic Pacific on the Sino Iron project in Pilbara, Western Australia.

The project is currently three years late, is approximately $6 billion over its original $2.5 billion budget and recently ran into problems while commissioning gearless drive motors on the autogenous grinding (AG) mills, further delaying start-up. These are the largest mills in the world, with each of the AG mills (there will eventually be six) 12.2 m in diameter and 10.3 m long, each with a 26 MW gearless drive.

Novak questions why China is interested in securing foreign sources of iron ore and concludes that it is mainly because domestic production falls far short of demand, while Chinese steel demand remains strong - in fact, China annually consumes approximately 1/3 of the world’s steel.

But Novak cannot yet determine whether the problems encountered on the Sino Iron project will dampen Chinese enthusiasm for investing in foreign mines, saying only time will tell.