VDMA

INDONESIA 2016

Best of Germany 2014 - Mining Equipment and Mining Technology

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18 VDMA 2016 • VDMA MINING SUPPLEMENT V d M a Mining: Mee T ing i ndus T ry n eeds d uring u n C er T ain Ti M es The Mining Association within the German Engineering Federation (VDMA), now known as VDMA Mining, consists of a little less than 120 companies that provide equipment and services for underground min- ing, open-cast mining/materials handling and mineral processing tech- nology, along with consulting, and research and development services. Many of these companies are privately held. In total, these companies represent approximately 90% of the German turnover related to mining and mineral processing equipment and services. The Best of Germany 2016 offers insight into all of the areas served and reports on new developments. It quickly becomes apparent in each section how much VDMA Mining contributes to the advance- ment of mining and mineral processing. In addition to equipment and technology, VDMA Mining is also contributing to the modern dialogue in areas of safety, engineering, training and environmental sustainabili- ty. This supplement concludes with a listing of member companies and a matrix describing the services each company provides. VDMA Mining members pool their competencies to foster busi- ness-to-business relationships in the mining sector. The association also represents member interests toward politics in Germany, Europe and other countries where they do business. As an example, the group is already looking to restore mining and milling operations in Iran. They exchange their experiences in several committees and set common objectives. As part of the greater VDMA umbrella, they have access to legal services, foreign trade experts, global economics and statistics, industry standards, and insurance services. ALong-term Vision Currently, the mining business finds itself in uncertain times. Prices for many metals are well below the record levels the industry experienced only a few years ago. In the short-term, it appears that gold and iron ore will experience a modest recovery, but prices for base metals remain soft. Coal consumption, which consistently grew at 2% to 4% annually for decades, posted a significant downturn last year. Factories are con- suming less power and steel mills have slowed production, so the two largest coal producers, China and the USA, have simply seen demand erode and, in some cases, replaced with natural gas. This swing in market fundamentals has left its mark on German mining machinery manufacturers' balance sheets as well. The industry expects a 3% drop in sales to 3.62 billion Euros (nearly $4 billion) for 2015. Still, they have a positive outlook for the future. Germany knows the situation first hand. The downward trend has con- tinued for its domestic market for mining machinery. Political discussions about the future of lignite-fueled power stations "is putting pressure on in- vestment levels," said Dr. Michael Schulte Strathaus, chairman of VDMA Mining, at its annual press conference, which was held during November at the Zollverein mine in Essen. He announced a decline in sales of some 8% to 210 million Euro ($229 million) for the industry in the current year. A continuing decline in profits is expected for 2016. The German manufacturers expect a 3% fall in international sales to 3.41 billion Euros ($3.71) in 2015. The Mediterranean and Middle East account for the largest export markets (17%). Saudi Arabia has become the largest customer with an 8% share. Together with Iran, governments there want to reduce their dependency on oil, according to Schulte Strathaus. Mining is being developed as an additional main- stay. Latin America is the second biggest sales region with an 11% market share, followed by China with 8%, the USA with 7% and Russia with approximately 5%. Decline in Exports The industry expects a further low single-figure percentage decline in exports for 2016. Miners are not investing in many new operations and they are working to reduce costs at existing operations. In some cases, they have elected to place the mines on care and maintenance until metal prices improve. VDMA Mining members understand the cyclic nature of the business. Already, some analysts see the current cop- per surplus turning into a shortage by the end of 2017, said Schulte Strathaus. Given the difficult situation, all in all mining machinery man- ufacturers have "done really well." Significant adjustments to staffing

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