From the Wall Street Journal:
Excerpts
"A $8 billion Australian mine that has yet to export a chunk of ore is emblematic of why China is rethinking its huge, multiyear effort to buy up resources abroad.
The mine, the Sino Iron project more than 900 miles north of Perth, in Western Australia, was launched in 2006 with an estimated $2.5 billion in development costs. The mine was to supply China with iron ore, a crucial steelmaking ingredient, and help China break into a global mining market dominated by BHP Billinton,Rio and Vale do Rio Doce.
Instead, Chinese owner Citic Pacific Ltd.has grappled with everything from high labor costs and naturally occurring asbestos in the rock to a massive ore-grinding mill that years after its installation still doesn't work''.
Analysts say the project's capital expenditure could reach $11 billion. Citic Pacific, an arm of state-owned Citic Group, declined to respond to requests for comment.
Excerpts
"A $8 billion Australian mine that has yet to export a chunk of ore is emblematic of why China is rethinking its huge, multiyear effort to buy up resources abroad.
The mine, the Sino Iron project more than 900 miles north of Perth, in Western Australia, was launched in 2006 with an estimated $2.5 billion in development costs. The mine was to supply China with iron ore, a crucial steelmaking ingredient, and help China break into a global mining market dominated by BHP Billinton,Rio and Vale do Rio Doce.
Instead, Chinese owner Citic Pacific Ltd.has grappled with everything from high labor costs and naturally occurring asbestos in the rock to a massive ore-grinding mill that years after its installation still doesn't work''.
Analysts say the project's capital expenditure could reach $11 billion. Citic Pacific, an arm of state-owned Citic Group, declined to respond to requests for comment.
"China has plowed $226.1 billion into outbound mergers and acquisitions to grab a slice of global resources since 1995, about a quarter of which was in the mining sector, according to data provider Dealogic. But people inside and outside the government say Beijing is taking a more careful look at projects''.
"The government still encourages 'going out,' " said Jin Bosong, deputy director of the Ministry of Commerce's International Trade and Economic Cooperation Research Institute. "But now the emphasis is to make companies ask questions like: 'Can the project make money?' " he said.
Mining projects are high on the list. Last December, a senior official at the government's top economic-planning agency said at a closed-door conference that while more than $10 billion has been spent on China's overseas iron-ore mining investments, few of these projects have begun operation, state-run Xinhua news agency reported.
"Some of these projects' infrastructure costs are far higher than the investment cost for the iron ore itself," said Wang Jianjun, deputy head of the National Development and Reform Commission's overseas investment department, according to Xinhua.
