Mining equipment industry in top gear
As mining becomes intense, the demand for mechanization and highly productive, safe, efficient and cost effective machinery will increase, writes Shyamal Asangi in this report
For the past several years the mining sector has been growing at the rate of 3% to 4% annually. Moreover, the new mining policy of Government of India is expected to give a further boost to the mining sector and the government is expecting to increase share of the mining sector in the GDP, which currently accounts for 2.8%.
Naturally, growth in the mining sector translates into an exponential growth for the Indian mining equipment industry. Currently, the market size of mining equipment in the country is estimated to be over Rs 10,000 crore. This industry is highly competitive with over 100 companies comprising of public (nearly 70%) and private sector companies (about 30% including joint ventures and closely held companies). Some of the players in the mining equipment industry include Volvo, Liebherr, Caterpillar, Sandvik, Terex, Bomag, Hyundai, Atlas Copco, Kobelco, Daewoo, Joy Mining, John Deere, Poclain, Tega, JCB, and Bitelli.
Indian mining sector
India is a mineral rich country and produces about 89 minerals. However, mining activity is majorly in coal, around 80%. The other minerals and metals mined include zinc, gold, lead, copper, iron, bauxite and uranium. Majority of the country’s mines (292 in public sector and 2,326 in private sector) are located in the states of Karnataka, Andhra Pradesh, Orissa, Bihar, Gujarat, Madhya Pradesh and Rajasthan. There are approximately 20,000 known mineral deposits in the country. In the year 2008– 09 the production from these mines was Rs113700 crore amounting to approximately 2.8% of the country’s GDP. The mining sector is extremely labor intensive and therefore generates large employment with over 2 million people working in the sector.
Indian mining equipment industry
The government of India is now focusing on the growth of this key sector. Hence mechanized mining has become very popular as it is efficient and cost effective. This has come as encouragement to the mining equipment sector and several companies have introduced technologically advanced, large size and efficient mining equipment in India. Majority of the companies design and manufacture mining equipment in-house while some companies market mining equipment from international players. Apart from this, several Indian companies have also entered into collaborations and agreements with international companies to enable them to sell their products in India.
The domestic players in the mining equipment industry include both the public and private sector companies manufacturing underground and surface mining equipment. However, several of the foreign companies have also set up operations in India to take a share of the fast growing mining sector pie. The important international and local players in this sector include Hyundai, Hitachi, Daewoo, Komatsu, John Deere, Wrigten, Tega, Atlas Copco, Liebherr, Joy Mining Machinery, Terex, Bucyrus Erie, DBT, Volvo, Caterpillar, Sandvik, Telcon, Bomag, Kobelco, Poclain, Dozco, JCB, and Bitelli. Buoyed by the growth in the mining sector these companies are also expanding their capacities. For example Dozco and Telcon are planning/have already added capacities to their existing production plans to manufacture sophisticated mining equipment for the Indian mining industry.
With Indian government keen to develop the country’s mining sector, mining equipment manufacturing companies offer products at par with international standards. Komatsu manufactures dump trucks and bulldozers while companies like Poclain, Telcon, and Kobelco are into the manufacturing of hydraulic equipment. Bittelli and Dozco design and produce earthmoving machinery and Bomag sells landfill equipment with Tega introducing hydrocyclones, water-only-cyclones and radial systems in the country. Liebherr launched diesel electric mining trucks and Volvo’s trucks are claimed to be sturdy workhorses. Sandwik offers machines for digging holes, Caterpillar offers Computer Aided Earthmoving System and Terex manufactures loaders. Atlas Copco’s mining equipment also includes drilling rigs.
Potential in coal and steel mining
There is a huge potential in the Indian mining equipment manufacturing sector as the mining sector has become extremely dynamic. Coal mining, which covers around 80% of the mining activity, is slated to grow at a furious pace as the power demand is expected to go up tremendously. The government is planning to double the power production that in turn will increase the demand for coal and boost coal mining. Also, the surface coal mining is nearing saturation and the mining companies are looking at underground mining for which they will need sophisticated and highly technical equipment. The consumption of steel in the country is low compared to the more mature economies. The country’s steel capacity is over 100 million tonnes and a ton of steel requires around 1.8 tonnes of iron ore generating a huge demand for iron ore mining and the equipment needed for that. Besides with a growing economy there is always a demand for all types of metals and minerals.
Time to ramp up!
With a demand to speed up the high capacity mining and increasing automation, the requirement for large equipment is also expected to shoot up. The mining sector is now looking at highly sophisticated, efficient, customized and safe equipment and therefore it is imperative for the mining equipment companies to introduce technologically innovative machinery and increase investment in R&D. Since there is a huge pressure on mining companies to speed up production and also maintain quality of the minerals, the demand for highly sophisticated equipment is sure to go up. The end users of this equipment are highly demanding, and will opt for operationally efficient, safe, and cost effective machinery.
The Indian mining companies largely catered to the domestic market, however, with the opening up of this market to the international players the competition has intensified and the stakes have gone up tremendously. The local companies need to start benchmarking product efficiencies and quality with global norms.
The mining industry has targeted to achieve Rs 416,500 crore by 2015 and this augurs well for the mining equipment companies. The coal and iron ore mining is expected to be intensified as the government has promised ‘power for all’ in the next couple of years and the construction of infrastructure is expected to boom once again since the government is trying to achieve an economic growth of 8 to 9 % in the next decade. Edelweiss, a financial services company, in its 2008 report predicted that the industry is expected to reach a size of approximately Rs.1.34 trillion by the end of the 2012. This translates to around 2.5% of the country’s GDP. The Indian mining equipment industry is also expected to see an investment of Rs223.95 billion in the next five years with more and more international players entering the sector and local companies’ ramping up the production capacities. Clearly the trend is moving towards more and more automation. As mining becomes intense, the demand for mechanization and highly productive, safe, efficient and cost effective machinery will increase.