I suppose this is to make up for the lack of wood? 

It’s just because steampunk isn’t steampunk without some cogs. (And cogs seem like an interesting resource to play around with, since they could be made out of other materials. I like the idea of being able to invent a machine that turns iron into cogs, or melts cogs into iron.)

or does both of those things in a never ending cycle of cogs to iron to cogs

although we have to be careful that Put’s scenario doesn’t lead to an infinite resource loop.

Re: Put’s scenario
It should be easy to make sure that all Properties (or should I say “parts”) are costed to be slightly inefficient when it comes to exchanging resources.