China CNR makes tracks in quest for overseas expansion

Updated: 2013-01-12 09:33

By Du Juan in Dalian, Liaoning (China Daily)

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Ore cars delivered to global mining giant Rio Tinto

China CNR Co Ltd has taken a major step in its overseas expansion.

It has delivered the first batch of a new type of ore car - rolling stock to transport ore - to mining giant Rio Tinto PLC, and will continue to enlarge its global businesses this year.

Wei Yan, general manager of Qiqihar Railway Rolling Stock Co Ltd, a subsidiary of CNR, said on Friday that Rio Tinto has provided a good platform for the company to enter the international market. He said one-third of the company's revenue in 2012 came from its overseas market.

"Global iron ore demand driven by economic development has provided Chinese heavy duty manufacturing companies like us with great opportunities to expand our businesses," said Wei.

Clayton Walker, chief operating officer of Pilbara Supply Chain at Rio Tinto Iron Ore, said China CNR delivered 600 ore cars to Rio Tinto, and future cooperation is still under discussion.

The new ore cars were designed by Qiqihar Railway to Rio Tinto's specifications and are tailor-made to suit the miner's systems.

"We will therefore be able to extract the maximum value from them," said Walker. "With their 40-ton axle load and payload of 140 tons, these new cars will help me perform my job better."

The purchase is the latest example of Rio Tinto's strategy of buying more high-tech equipment in the Chinese market.

It spent $19 billion on procurement globally in 2012, with about 9 percent of this being spent in the Chinese market, according to Ramsay Chu, head of the miner's procurement department.

The company spent $1.7 billion on raw material and equipment purchases in China in 2012, about $500 million more than the previous year.

Chu said the figure will continue to increase this year, but declined to elaborate.

Last year, Qiqihar Railway also signed a 40-ton-axle-load stainless steel wagon export contract with a total value of more than 100 million yuan ($16 million) with Hamersley Iron Pty Ltd, a fully owned subsidiary of Rio Tinto.

On September 19, it signed another long-term cooperation framework agreement with Rio Tinto, which further upgraded their cooperation. The company has exported nearly 4,000 ore cars to Rio Tinto so far, close to half of the Rio Tinto fleet, Walker said.

The heavy-duty wagons that originate from the United States are only used in a few countries, such as Canada, Brazil, South Africa and Australia.

Qiqihar Railway is also the first company to use stainless-steel bodies for large-tonnage wagons. As the largest development and export base for railway wagons in China, it has four manufacturing bases in the country, in Qiqihar, Dalian, Harbin and Mudanjiang.

Its products have been exported to more than 20 countries and regions, including Australia, New Zealand, the US and Brazil.

Wei said it is a natural choice to supply global customers based on the company's experience, technology and production capability.

In June last year, Rio Tinto also received a shipment of custom-built trucks from Xiangtan Electric Manufacturing Corp, a manufacturer based in Xiangtan, Hunan province.