Mining equipment makers rise to efficiency challenge – by Maria Sheahan and Niklas Pollard (Reuters U.S. – June 20, 2013)

FRANKFURT/STOCKHOLM – (Reuters) – Mining equipment manufacturers are making improvements to machinery that they hope will deliver productivity gains for customers and counter falling orders.

Under pressure from investors for higher returns, miners want to get the most out of every shovel, grinder and truck to help maintain margins which are being squeezed by high labour and energy costs and cooling commodity prices.

At an industry dinner this month, the new boss of the world’s largest miner, BHP Billiton, compared the sector’s search for efficiency to that of motor racing teams.

Thanks to tiny changes, he said, the Formula One pitstop – the time when cars are stationary for tyres to be changed – has gone from just under 4 seconds in 2010 to just over 2 seconds this year. “If we look at our industry, the prize is significant,” BHP Chief Executive Andrew Mackenzie told his audience.

“For us, every 1 per cent improvement in productivity translates to a $170 million saving.” Half of BHP’s operating costs are labour and contractors.

Much of the equipment used in mines is unlikely to change dramatically.

But as Mackenzie told his fellow dinner guests, small improvements could make a difference for both the industry and the firms supplying it.

Equipment makers have been hit hard by a sharp drop-off in major new mining projects as miners cut back on spending.

U.S.-based Caterpillar cut its 2013 profit forecast in April, reflecting an expected 50 percent decline in sales of its traditional mining trucks and loaders. [ID:nL2N0D90KJ

Industry cuts also prompted a 26 percent fall in first-quarter mining orders at Sweden’s Atlas Copco. At domestic rival Sandvik, mining orders fell by almost a third on a like-for-like basis. The two companies together supply more than half the global market for underground mining gear.


Equipment makers hope the latest versions of their machinery will help spur new orders.

“You cannot really improve on the drilling itself,” said Ulrich Schoepf of the Deep Drilling division at Bauer Maschinen GmbH, a unit of Germany’s Bauer AG.

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