“Bookings were up 18% sequentially from the fourth quarter of last year, with strong orders for both original equipment and aftermarket. The aftermarket is particularly encouraging because it indicates that our customers continue to increase their production levels in response to growing demand. The strong order rate is in line with our market outlook that customer capital expenditures will increase in response to improving commodity demand and limited excess mine capacity. As a result, we continue to see a multi-year expansion ahead that will become the second leg of a long growth period for mining.”

Compared to a year ago, original equipment orders more than doubled and aftermarket orders were up 18%. Original equipment orders in the underground business increased by $327 million from the prior year. The increase was largely attributable to a major longwall system in Australia and to continued strong demand for room and pillar equipment in the US.

The longwall order was a full scope, turnkey solution, which includes all of the ancillary equipment needed to operate the longwall, and a follow-on life cycle management contract. It is anticipated that longwall projects in the future will increasingly adopt this contract structure. US original equipment order rates remain strong as customers continue to upgrade and expand their fleets. Aftermarket orders in the underground business increased by $21 million over last year. Aftermarket products in the underground business are comprised primarily of parts and rebuilds. Parts demand was up across all regions, but rebuild bookings in the US decreased compared to last year. Last year’s underground rebuild bookings were unusually high as US customers moved quickly to secure available rebuild slots when activity started to improve.

Original equipment orders in the surface business were essentially flat with last year’s strong bookings. Orders this quarter were from Canada, South America, Australia and India and were for machines going into coal and copper mines. The Indian orders are noteworthy because they are the first orders from India in several years. Favourable changes in contract terms that now meet the company’s contracting guidelines for limitation of liabilities have reopened the Indian market for the company.

Aftermarket orders for the surface business increased by $76 million from last year, with increased demand for parts across all regions.

Net sales in the underground business increased by 21%in the first quarter to $511 million. Original equipment sales were up 11%, led by longwall deliveries to China and room and pillar sales in the US. Aftermarket sales were up 29% due to higher parts and rebuild sales. Parts sales increased from last year in most regions, led by China and the US. Rebuilds were also up in the quarter in the US, Africa and the UK.

Net sales in the surface business increased by 18% to $386 million in the first quarter. Original equipment sales were up 12%, including increased alliance equipment sales for which the company serves as a dealer. Aftermarket sales were up 21% from last year, with the strongest increases in the copper and coal producing regions of South and North America.

Joy commented that international commodity markets continue to be driven by strong growth in emerging markets and recovery in industrialised economies. Industrial sector inventory levels that were drawn down in 2009 have remained at historically low levels. With the improved outlook, companies are planning to increase inventory levels to support higher sales. This restocking effect will add another element to global commodity demand. In the emerging markets, China and India have announced major infrastructure projects as they continue on their path of industrialisation. These infrastructure projects will continue to drive high demand for commodities such as coal, copper and iron ore.

Global steel production was essentially flat during much of 2010, but growth resumed in the fourth quarter and production is expected to be up 5 to 6% in 2011. Supply constraints have kept upward pressure on both iron ore and metallurgical coal prices. Iron ore supply has been limited by export restrictions from India and rapidly declining ore grades in China.

Although contract prices for iron ore at the end of 2010 were up 40% from the year prior, they are 30% below spot prices and are set to increase further in 2011. The major seaborne iron ore producers have plans to increase production by more than 50%, but markets should remain tight for the next several years as these expansions will take five to six years to complete. Metallurgical coal prices were also on the rise in 2010, moving from $200/t at the end of 2009 to $225 in the fourth quarter of 2010.

The seaborne market for thermal coal continues to be driven by demand from China and India. China and India’s share of seaborne coal trade has doubled in the last three years to 26%. China’s domestic coal production has been growing over 15% per year and is expected to continue that growth. India produced about 550 Mt of coal in 2010 and has plans to grow to 700 Mt in five years. Despite this strong domestic growth, imports will continue to grow in China and India. China coal imports are expected to grow from 166 Mt in 2010 to 180 Mt in 2011. India’s imports are expected to grow from 47 to 60 Mt over the same period. This continued growth in demand has raised contract prices for seaborne thermal coal from $98/t last year to $125/t for the first quarter of 2011. As a result, there are a large number of mine expansion projects in seaborne exporting countries such as Australia, South Africa and South America.

Flooding and cyclones disrupted coal supplies from Australia, which supplies 50% of seaborne metallurgical coal and 8% of seaborne thermal coal. Prices have spiked in response to supply shortages estimated to be 10 to 20 Mt for the year. Metallurgical coal prices increased to $380/t and thermal coal to $145/t. However, mines were better prepared after the flooding in 2008 and are expected to return to full production sooner. Coal prices are expected to moderate in the second half of this year, but still show significant year over year growth based on longer term supply-demand fundamentals.

The US coal market improved during 2010, driven by increased coal burn for power generation, declining utility stockpiles, increasing exports and rising prices. Demand for coal grew by 75 Mt in 2010. Electricity demand was up 5.5% in 2010 and two-thirds of that increase was fueled by coal. Utility stockpiles declined by about 30 Mt, and they should decline by another 30 Mt in 2011 at current supply levels. In addition, there are 22 GW of new coal fired capacity that will come on line by 2012. Exports increased by 18 Mt in 2010, and export growth is expected to continue.

Producers in the Powder River Basin (PRB) are investing in capacity to increase their exports from West Coast ports. As a result of this improved outlook, prices for Eastern and PRB coal are up more than 30% and 50%, respectively.

US customers are renewing and expanding their equipment fleets, with some new mine projects being discussed.

While China primarily supported the copper market through 2009, the rest of the world created 60% of demand growth in 2010. Global copper demand was in excess of supply in 2010 and the annual deficit is expected to grow to around 500 Mt in 2011. Copper has the longest lead time and highest risk associated with new green field capacity, and this adds support for copper prices. Today’s prices of $4.50/lb are expected to top $5.00 later this year. The long-term strong demand and pricing outlook is driving expansion projects in low cost regions such as South America and in higher cost regions such as North America. In addition, there is an increasing pace of investment in longer term capacity from Central Africa and Mongolia.

With rising oil prices, the oil sands continue to increase production via brown field expansion. In addition, several delayed projects should be reactivated in 2011. And finally, aftermarket activity will increase as shovels delivered in the past three to four years reach their first rebuild cycle.

The strong outlook for commodity demand is increasing commodity prices to levels needed to support broad based expansion, including expansion in high cost regions. Customer capital expenditures are expected to be up more than 20% in 2011, after rising over 30% last year. There is a strong correlation between customer capital expenditures and the company’s bookings for original equipment.