Creating the world’s largest moving robots to transport iron-ore across the vast Australian Outback is proving more complex and time-consuming than expected for Rio Tinto Group, fueling doubts the technology can deliver promised returns as major rivals defer similar investments.
Rio, which gets more profit from iron-ore than anything else, is already two years behind schedule with a $518 million effort to deploy automated trains on its 1,700-kilometers (1,056 miles) of track. While the system was designed to save money by expanding capacity and reducing labor costs, instead the delays mean the producer has cut output forecasts, and raised questions about whether the project is viable, according to Deutsche Bank AG.
“There was an underestimation of the mechanical work we had to actually do versus the reality,” Andrew Harding, the chief executive officer of Rio’s iron-ore unit, said in a June 3 interview in Perth. “The second issue is working our way through carefully implementing the various software upgrades as we go along.” He declined to specify when the program may be completed, though he said he had no doubt it would.
Big mining companies like Rio are no strangers to automation in Australia, the world’s biggest iron-ore exporter. Many use driverless systems for trucks and drills at mines and remotely operated equipment at export terminals.
Winning savings on the trip between those two locations is proving more difficult, as the industry seeks methods to extend cost cuts as iron-ore prices have tumbled 74 percent from a record in 2011.
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