Back in late 2009, with some fanfare, Sandvik Mining & Rock Solutions opened one of its largest ever global mining equipment production and assembly sites in the Jiading Industrial Zone, just outside Shanghai, China – a site capable of producing almost the full underground and surface mining product line for both the Chinese but also the global market.
New machines were also designed there, such as the DH350 compact drill rig, which was fully developed and manufactured at Sandvik’s Jiading R&D centre. The carrier for the DD2710 jumbo was also developed there plus other product lines aimed at the domestic market like the LH204 loader which was a collaboration between R&D teams in China and Finland.
However, the facility was planned and designed before the 2008/2009 downturn and the resultant drop in mining equipment demand in China and elsewhere meant that the site’s capacity was never fully utilised. The Chinese market is also highly price sensitive and competitive – as an example, while Sandvik has had significant success with its top line load and haul plus drilling units with Chinese tier 1 mining customers, the mining mid-tier crusher business has been tougher competing against the numerous Chinese OEMs in that market. But for the main product lines, the global demand was increasingly able to be met by the home facilities in Tampere and Turku. On top of all that, Jiading being effectively in Shanghai became increasingly expensive to operate.
Fast forward to today and the site is operating with less than 200 employees, while the focus of Sandvik’s mining business has moved to more regional hubs like the Sandvik Luoyang Technology Service Centre which serves Henan, Hebei, Shanxi, Shaanxi, Shandong, Anhui and surrounding areas in southwestern and northwestern China and Inner Mongolia. Sandvik’s main competitors also have their manufacturing footprint outside Shanghai.
As a result, Sandvik has opted to consolidate its Chinese position and shift production to a smaller facility that is tied to current manufacturing levels while also being closer to mining customers. Mats Eriksson, Sandvik Mining’s President, Load & Haul Division told IM: “The objective is to optimise the site and maintain manufacturing capabilities within China, whilst achieving the necessary cost improvements and increased flexibility. Following an in-depth review, it has been decided to close down/liquidate the legal entity in Jiading and establish new premises outside Shanghai, which will be used by the Load & Haul and Underground Drilling Divisions. The region that has been selected for Load & Haul and Underground Drilling activities is Jiangsu Province, which is of benefit from a supply chain perspective and is less than two hours from Shanghai by high-speed train for travel purposes. The replacement facility will be rented, not purpose-built.”
It is understood this transition will occur in 2021 with the new facility set to start ramping up from the beginning of April 2021, due for completion by end-September 2021.
The company adds: “There is no impact on Sandvik Mining and Rock Solutions ability to manufacture and deliver. Those impacted by the decision have already been informed and will be fully supported throughout the process, which will at all times be conducted in accordance with legal requirements and our Sandvik Code of Conduct.”