Mining equipment manufacturers in Germany have succeeded in increasing their turnover for the first time since the economic and financial crisis. Compared to the same period of the previous year, revenues rose by 10% in the first six months of 2018, while incoming orders saw an increase of 17%.
“There are clear signs that the strong decline in turnover we experienced over the past years has bottomed out and that the sector can now look forward to an upswing once again,” says Dr Michael Schulte Strathaus, Chairman of the VDMA Mining Association. He expects that turnover will increase by 8% for the whole year 2018.
Foreign business is the key reason behind the positive development. The expected increase in turnover is almost completely generated by business outside Europe. According to VDMA figures, exports to China increased by 55% in the first six months, while exports to Russia rose by 54%. In addition, business with Canada, parts of South America and Australia is going well. Exports to Canada in the first six months of 2018 were almost on par with the export figures of the entire previous year (EUR 26 million compared to EUR 29 million). One half of the 45% increase in South America can be attributed to exports to Argentina (EUR 14 million), while mining equipment at a value of EUR 23.5 million was delivered to Australia.
In contrast, business in Europe is declining. Compared to the same period of the previous year, exports to EU-28 countries declined by approximately 40% in the first half of 2018. “This decline can be attributed to last year’s investments in major infrastructure projects, which had an influence on the previous year’s figures,” says Klaus Stöckmann, VDMA Mining. Business with the rest of Europe fared much better, with export figures increasing by nearly 7%. Exports to the USA declined slightly (- 4%).
Domestic business is also experiencing a downturn, with turnover in the first six months dropping by 35% compared to the same period of the previous year. VDMA Mining assumes that this decline can be attributed to the phasing out of coal mining and particularly the uncertainties concerning lignite. Capacity expansions are expected neither in the coal sector, nor in the potash and salt industry. The association expects similar or slightly declining turnover in the domestic market for the future.
At the peak of the economic and financial crisis in 2012, the German mining technology sector was experiencing a strong economic tailwind. While virtually all other industrial sectors recorded heavy losses, the German mining equipment sector achieved an all-time record turnover of EUR 6.2 billion. One major reason were the long lead times, with one to two years passing between order receipt and delivery, and thus receipt of payment. Economic factors thus made their mark on manufacturers’ balance sheets with a considerable delay. The impact of global developments was felt only one year later. Since then, turnover declined by more than 50% to EUR 2.7 billion in the previous year.
However, this downturn now seems to have bottomed out. The significant increase in incoming orders of 17% in the first months of 2018 is considered to be a clear sign of economic recovery in this sector, as is the increase in turnover of 10% recorded in the same period.
According to VDMA, the overall increase in demand is almost exclusively due to replacements and investments the global mining industry undertakes to optimise efficiency and costs, and to increase safety in the mines. “This is what drives our business,” says Stöckmann. Exploration projects concerning new raw material deposits are few and far between at the moment. In fact, mine operators in some parts of the world are still devoting much of their time to reducing the excess capacities created prior to the economic and financial crisis.
The VDMA is currently working on developing a technology roadmap for member companies to provide a guideline for the future. The roadmap is intended to provide comprehensive information on the technical challenges and requirements the sector will be facing in the next 10 to 15 years. “This is an ongoing process,” says Stöckmann. “We are currently in the midst of discussions.” In addition, the roadmap is intended to highlight potential areas of cooperation between member companies and universities. And the first step has already been taken. Together with RWTH Aachen University, the VDMA is planning an event under the motto “High-performance mining,” which is to be held on December 4 and 5, 2018. This event is designed to assist mining equipment manufacturers in identifying and addressing market demands early on.
