Mining machinery manufacturers in Germany have mastered the turnaround. After revenues continued to decline for four consecutive years, the sector is now expecting to break even in 2017. Based on the figures for the first nine months of the year, the mining equipment manufacturers are expecting to at least repeat their turnover of EUR 2.95 billion from 2016, as the Chairman of VDMA Mining, Dr Michael Schulte Strathaus, reported. Revenue from foreign markets is expected to grow by 1% to EUR 2.84 billion. Revenue from the domestic market is expected to fall by 15% to EUR 110 million.
This optimism is based on the increase in incoming orders from abroad since the fourh quarter last year, according to Schulte Strathaus. In the first nine months alone, orders increased by 38% compared to the previous year. In the sector, it is not unusual that a year or more passes between incoming orders and delivery, which is why turnover is expected to grow in 2018 and 2019. Schulte Strathaus also explained that the companies’ presence on almost all world markets allows them to balance even significant fluctuations. At the moment, 96% of turnover comes from abroad and about 11,600 staff are employed.
According to Schulte Strathaus, the decrease in domestic business to EUR 110 million is a byproduct of the “general uncertainty” in the German raw material sector which includes the closing of the last two hard coal mines; brown coal (lignite) is also facing an “uncertain future”. Policymakers’ demand for a quick withdrawal from coal-based electricity places a burden on the sector. Germany operates an energy policy that is fragmented, unpredictable and, from an energy-economy perspective, not always comprehensible. Although there is no ready substitute at hand, the energy supply safeguarded by brown coal (lignite) is being undermined. Schulte Strathaus referred to the statements of experts who have long warned about the incalculable risks for network stability and thus power supply throughout the country. Nonetheless, the sector is hoping to maintain its domestic turnover in the coming year. In the medium and long term, however, results are expected to continue to drop.
The largest export region for mining equipment is the EU. In the first nine months of 2017, approximately 28% of exports went to EU countries, which is 7% more than the year before. Conveyor technology, safety systems and accessories, in particular were sold. Business is also going well for tunnel construction. Turnover is expected to remain the same or even grow in 2018. About 15% of exports went to the second largest country of exportation, the USA. This represents an increase of 5% compared to the previous year. According to Schulte Strathaus, US President Donald Trump has for the most part upheld his promise of not reducing coal extraction or closing coal mines. And jobs were also preserved. The sector anticipates a further growth in exports to the USA in the year ahead.
Exports to China and Russia also increased. Mining technology “Made in Germany” remains popular in China according to the Chair of the VDMA trade association. The focus remains on high-performance mines. Small, unsafe and inefficient mines need to be closed and replaced by new and larger operations. A backlog was created in Russia that could be partially realized this year. Manufacturers expect their business to improve in both countries.
