Australian boom propels Chinese industry upward
By Geoff Raby
The snow-covered city of Qiqihar in China's far northeast is a long way from Western Australia's Pilbara region, renowned for its dry red earth and searing temperatures.
Yet it is here that 260 rail freight cars are currently being manufactured for Australia's Fortescue Metals Group (FMG). These wagons, now being tested in freezing temperatures at Qiqihar Railway Rolling Stock's (QRRS) manufacturing facility, will soon be carrying iron ore under the boiling Australian sun on the rail line linking FMG's flagship Cloudbreak Mine to Port Hedland, from where the ore will be shipped to China.
These wagons are the latest in a long line of rail freight equipment exported by QRRS to Australia. Australia is now the largest export market for QRRS, with demand from Australia's major miners driving the five-fold increase in the company's export revenue over the past decade.
QRRS has now exported almost 6,000 wagons to Australia, 3,000 alone to mining firm Rio Tinto, which uses QRRS rail cars throughout its vast Pilbara operations. QRRS has established a warehouse in Perth, capital of Western Australia, to supply parts and provide after-sales service to its growing Australian customer base.
QRRS' expanding business is just one example of how demand from Australia's expanding resources and energy sector is helping China's heavy transport and machinery manufacturers move onto the global stage. Australia is one of the world's biggest markets for mining-related transport and equipment, which is increasingly being sourced through cooperation with China.
Other examples include CNOOC Engineering's construction of a floating production storage and offloading facility for BHP Billiton's Pyrenees offshore oil project, the Karara iron ore project (jointly developed by Ansteel and Australia's Gindalbie Metals) sourcing a magnetite concentrator and other processing equipment from China, and Baosteel winning the contract to supply a 400 kilometre pipeline to the CNOOC/BG Group Coal Seam Gas plant in Queensland.
Such projects are doing more than just providing another overseas market for China's leading heavy industry companies. As a significant and growing market for Chinese mining technology, Australia is driving China's heavy manufacturing and engineering sector up the value chain.
For example, the floating facility for BHP Billiton's Pyrenees project mentioned above was a highly sophisticated project and the first such order of its kind in China, providing CNOOC with important experience in this area.
QRRS has also told me that, through its cooperation with Australian partners, it has made significant advances in technology, management and customer service that has increased its international competitiveness.
It is well understood in China that Australia's vast energy and mineral resources are vitally important to this country's ongoing economic development. However, much local media comment tends to focus on the adversarial nature of this relationship, particularly when supply contracts are being negotiated between Australian miners and their Chinese customers.
There also remains a perception in some quarters that Australia is not fully welcoming of Chinese investment in our resources and energy sectors.
Thankfully this perception is diminishing, with the facts speaking for themselves. There has been 200 investment approvals from China in the past three years worth over $60 billion, with only six applications subject to conditions and not one rejected by the Australian government.
There are now dozens of Chinese-invested resources projects in Australia, providing jobs and prosperity for many Australians. Chinese investment has been particularly important in the recent development of Australia's magnetite iron ore resources, which had not been considered for development until Chinese enterprises showed an interest in this type of material. Therefore, the reality is that the Australia-China resources and energy trade is truly mutually beneficial. There is now a complete, shared value chain between our two countries in this sector.
As ongoing strong demand from China drives a supplier response that will see new projects come online in the Pilbara, North West Shelf and other parts of Australia, the benefits from this trade will continue to flow to both our countries. This will include Australia's resources and energy sector and China's heavy industry and engineering sector becoming increasingly integrated.
Australia is committed to remaining a long-term, stable supplier of the minerals and energy China needs for its ongoing industrialization. But we will be much more than that. We will also be a means for China's leading manufacturers to continue their rise up the value chain and emerge onto the global stage as high-technology, internationally competitive players.
(Printed in Global Times on 10 Jan)