Sunday, 22 Aug 2010China Daily reported that domestic engineering companies like Sinosteel Corp are reaping the gains from the recent surge in Australian mining deals, thanks to the considerable cost advantages they offer.
Chinese companies have made inroads in the Australian market as they offer engineering services at rates which are nearly 30 percent lesser than other Australian companies.
Mr Han Shengjian an official with an export association under the Ministry of Commerce said "With more and more Chinese companies on a resource trail especially in Australia, the need for equipment and construction engineering is also increasing."
He said that revenue from engineering and construction related product exports is expected to reach USD 8 billion over the next three years.
Mr Wayne McCrae chairman of CuDeco said "Chinese companies must not only invest in resource development, but also in the infrastructure needed to successfully complete and run the project."
Companies like Sinosteel are the best placed to take advantage of these opportunities as they are already present in the resource development sector.
Sources said by adding engineering and construction services to the services it offers, it will now be able to undertake the entire gamut of mining operations. Some Chinese companies have however, faced stiff resistance from the Australian authorities on mining deals.
Mr Zou Weimin chairman of MCC Overseas Ltd said state owned construction company Metallurgical Corporation of China Overseas, has been facing several problems in Australia. He said that "If construction workers can speak fluent English, they can easily find white-collar jobs."
Mr Wang Jian deputy general manager of Sinosteel Equipment & Engineering said other obstacles for Chinese companies involved in construction projects often include insufficient knowledge on financial and legal aspects, local regulations, wage disparity and accommodation.
Mr Wang said the company expects to complete the CuDeco deal smoothly. He said that "It would be the first successful mining construction undertaken by a Chinese company in Australia, and it will help us accumulate rich experience.
Mr McCrae said "Challenges for Chinese companies in Australia are numerous. The occupational and health and safety norms are heavily regulated in Australia. Hence it is important for companies to find the right consultants and legal representatives to address these issues."
He said that "The Chinese companies also need to find the right employees and contractors in Australia to assist them in the various stages of construction like logistics, concrete supplies, earthmoving, cranes and operators, transport, housing and accommodation and engineering groups."
Sinosteel Group first became actively involved in the Australian resources sector with the signing of the Channar Mining joint venture agreement with Hamersley Iron in 1987 and acquired a 40% stake in the Channar iron ore mine in the 1990s.
The company also made a successful USD 1.36 billion bid for Australian mining company Midwest a couple of years earlier and the venture started its first shipment of iron ore in December 2009. Last June, Sinosteel won approval to mine ore at Koolanooka in Western Australia.
(Sourced from China Daily)
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