Mining equipment industry executives are forecasting moderate to low growth in the short-term as uncertainty still persists about the potential for a global recession.
Global mining capital expenditures are expected to drop -14% through 2014 from a peak of $136 billion this year as commodity producers reduce capital spending.
BHP Billiton, the worldâs biggest mining company, delayed an estimated $68 billion worth of projects last month and Australian iron-ore producer Fortescue Metals Group cut its full-year spending forecast by -26% to $4.6 billion.3
For the long term however, the outlook for mining has remained positive.
5 Key Takeaways from MINExpo 2012
- Equipment manufacturers are cautious short-term as the dropping price of natural gas makes it a more viable alternative to coal. Long-term, however, they remain optimistic with coal expected to satisfy 80% of electricity demand through 2035.
- China is seen as a place for future growth. Both Caterpillar and Joy Global are making large investments to gain market share there and China currently commissions a new coal-fired power plant every week.
- Mining companies are still developing plans for projects with some delays but no material cancellations to-date despite the uncertainty.
- Population growth and energy demand continue to drive the long-term outlook for production and inventory levels.
- Opportunities for growth in mining remain with mine consolidations, technology improvements, emerging markets, and the growth in global demand for coal as a primary energy source. 1
Caterpillar, which recently purchased mining equipment maker Bucyrus for US$8.6 billion and acquired ERA Mining in China last year, has stated that it wants to become the leader in underground equipment. This comes in addition to Caterpillarâs goal of being #1 in terms of market share for construction by 2015. 1
The company did cut its 2015 outlook as mining spending fell, but is betting on a continuation of growth in commodity demand.
Caterpillarâs retail sales for the 3 months ending August 2012 were up +24% in North America and +27% in the Asia-Pacific region. Overall global sales were up +13%.2
General Electric announced the creation of a new mining unit expected to reach $5 billion in sales within a few years, according to CEO of GE Transportation Lorenzo Simonelli. 3
GE has expertise in mining, particularly in electric drives for mining trucks, and has invested substantially in the underground mining segment. The company began amalgamating its various mining-related platforms two years ago and more merger and acquisition activity is expected. 4
Hitachi currently has 10% of the market share for dump trucks over 150 tons
Approximately 70% of Hitachiâs mining equipment sales come from the coal industry with the remaining coming from iron ore.
Hitachi currently has 30% of the market share for excavators (with a 1-year backlog) and 10% of the market share for dump trucks over 150 tons (with a 6-months backlog). The company has seen some cancellations for dump trucks that began mid-August but it is looking to offset those with sales in other regions. 1
Liebherr management has a very positive outlook for the long term. The companyâs market share for mining excavators was 19.5% in 2011 and the company is targeting market share over than 20% for the future.
Liebherrâs capacity goal is for more than 300 mining excavators and more than 120 mining trucks per year. 1
- Credit Suisse, September 27, 2012
- Credit Suisse, September 25, 2012