Rio Tinto says Chinese now make 'much higher quality' mining equipment

The CEO of world number two miner Rio Tinto last week told an investor conference the quality of Chinese mining equipment is catching up to that of the major US manufacturers.

The Wall Street Journal quotes Rio Tinto (LON:RIO) CEO Sam Walsh as saying that the Anglo-Australian giant has been increasing purchases of heavy equipment and other items from India and China, and has found the quality impressive.

Among RIO's purchases were heavy-duty trucks, equipment for loading ships and rail cars that carry ore.

Without naming any names, Walsh said "funnily enough" on the rail cars "the quality actually was much higher" compared to the miner's traditional supplier: "Instead of spot welds, for example, on the sheet metal they were actually continuous welds."

A JP Morgan analyst said that quality at Chinese equipment makers can vary widely, but "it’s incredible the speed at which they are coming up the quality curve."

It's a development that spells tougher competition down the line for a host of mining equipment suppliers, including the likes of Caterpillar (NYSE:CAT), Joy Global (NYSE:JOY), Komatsu and Liebherr.

Leaders CAT and Joy Global are having a tough year. In October, world number one supplier Caterpillar lowered guidance and reported revenue numbers below analysts expectations, while Joy Global last week reported a 26% slump in sales as the slowdown in mining capital expenditure continues.

Other manufacturers like Belarusian mining equipment manufacturer Belaz are also muscling in on the traditional leaders turf. Belaz is testing a truck which will be the world's largest capable of carrying a 450 tonnes payload.

Image of US$300,000 BZK D45 dump truck courtesy of Beijing Zhonghuan Kinetics Heavy Vehicles.