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Mining equipment makers rise to efficiency challenge

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 coolingcommodity 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.

SMALL CHANGES

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

Atlas Copco unveiled a new rock drill in April that it said was 20 to 30 percent faster than the nearest contender thanks to a damping system that absorbs reflex shock waves.

Sandvik said in May it was field-testing a new generation of underground hard-rock mining trucks which have an on-board jacking system that allows flat tyres to be changed quickly wherever they occur.

Automation has been at the root of many of the dramatic improvements in mining productivity in recent decades - from automated drills for deep mines to the driver-less haul trucks used in Australia's iron ore-rich Pilbara region.

"I think the whole battle will be in automation," Atlas Copco Chief Executive Ronnie Leten said.

Germany's Bauer is due to present a new deep drilling rig which can drill down to 7,000 meters and will be "hands free".

"We have easily 200 to 300 competitors in deep drilling, but there are only two or three that have 'hands-free' technology," Bauer's Schoepf said.

Equipment makers are also offering after-sales services to help keep income flowing regardless of prospects for new mining projects.

"You sell a solution that includes services with a focus on productivity," said analyst David Jacobsson at Nordic investment bank Pareto Securities.

"The big benefit here on the mining side is that productivity and what it costs is so extremely measurable...(Manufacturers) can say 'yes, our product is 30 percent more expensive, but since the downtime is this much lower, your investment will still pay off'."

Western equipment makers face a growing threat of competition from Chinese companies.

Swedish state-owned mining group LKAB this year bought a new crusher for its open-pit mine Mertainen from China's Citic Heavy Industries. This was the first time it chose a Chinese crusher rather than buying from its usual supplier Sandvik.

"You see a nation like China, and their development that started out in textiles and then moved into mobile telephony. It is clear they are moving up also within mining gear," Per-Erik Lindvall, LKAB director of technology and business development said.

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