MTA-AUS 2014

CONEXPO-CON/AGG VIP SHOW GUIDE contains Floor Plans and a complete listing of companies exhibiting at the ConExpo-Con/Agg 2014 trade show in Las Vegas March 3-7, 2014. It also contains 2014 forecasts for the Aggregate, Concrete and Cement industries

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52 VDMA | 2014 VDMA MINING SUPPLEMENT VDMA Miners Looking to Optimize Operations Can Rely on German Engineering Expertise B u s i n e s s p l a n s a m o n g m i n e o p e r a t o r s w o r l d w i d e h a v e c h a n g e d . I n s t e a d o f b r i n g i n g a s m u c h c a p a c i t y o n l i n e a s q u i c k l y a s p o s s i b l e , th e i r a tte n ti o n h a s n o w tu rn e d to i m - proving the bottom line. And, that might be a good thing for German mining equipment suppliers and service providers. This was one of the messages Dr. Paul Rhinel ander, presi- dent of the German Engineering Federation's mining branch ( V D M A ) , p r e s e n t e d a t a p r e s s c o n f e r e n c e h e l d d u r i n g t h e branch's annual meeting at the Zollverein mine in Essen dur- ing late November. Similar to all equipment and service providers, the 130 or so members of VDMA's mining branch benefited from the min- ing super cycle that has recently stalled. "Looking back at an unrivaled history of success, we nearly tripled our revenues during the past 10 years. In the past year alone [2012], we have grown 28% to €6.2 billion [$8.5 billion]," Rhinelander said. "For the current year [2013], we expect, based on the figures of the first nine months, further low single-digit growth, maybe a 1% to 2% increase to about €6.3 billion [$8.6 billion]." At that point, Rhinelander believes their group has reached the peak of a cycle. He has predicted a two-digit percentage decrease for 2014 before business stabilizes or re- bounds in 2015. While this forecast for immediate business seems a bit d i r e , o n e h a s t o c o n s i d e r t h e c o n t e x t ; t h i s s m a l l g r o u p o f mostly privately held, medium-sized companies actually per- formed quite well compared to its peers during the last five y e a r s . T h e m i n i n g s e c t o r f e l t t h e i m p a c t o f t h e r e c e s s i o n brought about by the U.S. real estate meltdown and European debt crisis, but it recovered quickly. Unlike the manufactur- ing and construction industries, which are still waiting for a recovery, the mining industry is looking toward the future with confidence. "The demand of raw materials will increase during the medium and long term, perhaps significantly," Rhinelander said. "Ou r machines and knowledge will play a pivotal role in satisfying this demand." Returning to an RoI Approach Another important reason for the VDMA's confidence is a trend they see taking place. Because prices for mined-commodities, such as gold, iron ore and potash have dipped, mining com- panies are looking more closely at production costs. "Mining companies are again making massive calculations to deter -mine a reasonable return on investments [RoI]," Rhinelander said. "Today more mining companies are making purchasing decisions based on life-cycle cost rather than solely on the initial purchase price. German equipment sup- pliers could not compete with much of the low-priced equip- ment. When mines factor total life-cycle costs into the equation, the 'Made in Germany' logo now becomes much more competi tive. We are leaders in low total life-cycle costs in many sectors." The situation only improves, Rhinelander ex- plained, when the mining company is looking at more sophis- ticated technology or safety improvements. Cost control is benefiting small- and medium-sized com- panies in other ways, particularly for mine and plant con- struction projects. "We see more mining companies refusing to purchase thr ough 'bundled contracts,' where an engineer- ing firm selects all of the equipment from a small group of providers," Rhinelander said. "By opening these contracts to competitive bids, the mining companies are essentially un- bundling the purchasing decisions for equipment, each of which could be worth many millions of euros. These smaller lots are more attractive for medium-sized companies. This makes it possible for our medium-sized companies to actively participate, which we could not do in the past. This approach has resulted in orders, which is a positive development for our branch." Regional Markets In Europe, Germany is by far the largest market, but that pales in comparison to the groups' exports. For 2013, the VDMA was expecting a decrease of revenues for the European market of about 4% to €430 m illion ($589 million). Revenues related to surface mining remain relatively constant and the group expects a similar outcome in 2014, an additional decline of 4% with total revenues dropping to €400 and €430 million. "A large portion of future revenue will be affected by Ger- many's new energy law and how the government will handle this," Rhinelander said. "Lignite-fired power plants are run- ning at fu ll capacity and coal consumption has decreased. Mine operators in the region are looking at different ways to cut costs and save money. In addition to that, the few hard- coal mines that are still operating will soon disappear. RAG is slowing down investments continuously and in 2018, we will see it finally end. Companies that relied on sales to these mines will be forced to react to that situation." To compensate for this decrease of revenues, the VDMA members will export a large share of its equipment and expertise. For 2013, the VDMA expected to report an increase of export revenues of about 2% to €5.83 billion ($8 billion). This year, Rhinelander is predicting a double-digit percentage decrease. "We have reached the peak of the economic cycle for mining," Rhinelander said. "We have seen swings bot h up and down for commodity markets. This will impact the mining branch of the VDMA, but we know the situation will not last forever. Demand will again increase—under some circumstances very quickly." M e a n w h i l e , t h i s g r o u p o f m e d i u m - s i z e d c o m p a n i e s d e d - i c a t e d t o m i n i n g w i l l e x p l o r e o p p o r t u n i t i e s i n n e w m a r k e t s w i t h t h e s u p p o r t o f t h e V D M A . R e s u l t s s h o w t h a t t h e y h a v e b e e n v e r y s u c c e s s f u l w i t h t h i s a p p r o a c h , e s p e c i a l l y i n L a t i n A m e r i c a . " L a t i n A m e r i c a i s b e c o m i n g a m o r e a n d m o r e i m p o r t a n t m a r k e t f o r u s , " R h i n e l a n d e r s a i d . " T h e s h a r e o f e x p o r t s t o t h i s r e g i o n w a s 7 % i n 2 0 1 2 a n d i t h a s g r o w n t o 9 % i n 2 0 1 3 . " W i t h a m a r k e t s h a r e o f 1 4 % , t h e U . S . w a s t h e b i g g e s t e x p o r t m a r k e t f o r t h e V D M A i n 2 0 1 3 . W i t h m o r e s t r i n g e n t e n v i r o n m e n t a l r e g u l a t i o n s a n d a s h a l e g a s b o o m , m a n y c o a l - f i r e d p o w e r p l a n t s i n t h e U . S . h a v e e i t h e r s w i t c h e d t o

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