Tag Archives: Weir

Weir to sell Oil & Gas division to Caterpillar

The Weir Group says it has entered into an agreement for the all-cash sale of its entire Oil & Gas division to Caterpillar Inc for an enterprise value of $405 million, subject to customary working capital and debt-like adjustments at closing.

This follows the announcement in February 2020 that Weir would seek to maximise value from its Oil & Gas division as it continued its strategic transformation into a premium mining technology pure play.

The agreement will see Weir generate net proceeds to reduce the group’s leverage, while the transaction facilitates a $70 million US cash tax benefit for Weir to be realised over the medium term, it said.

While the transaction is subject to Weir shareholder approval, the company is hoping for it be completed by the end of 2020, assuming normal regulatory clearances.

Selling the division to Cat will help Weir transition into a premium mining technology pure play “focused on attractive markets underpinned by global demographic trends, the transition to a low carbon society and adoption of new technologies in the mining industry”, it said.

It will also provide a “differentiated aftermarket, service and technology offering with proven earnings stability and strong cash generation through the cycle”.

The company’s strategic intent will now be to build on leading mission-critical positions in the mining supply chain from extraction to concentration and tailings management. It will be aided by a strengthened balance sheet to provide enhanced flexibility to invest in future growth opportunities, it said.

Jon Stanton, Weir Group Chief Executive Officer, said: “We are pleased to have reached this agreement that delivers a great home for the Oil & Gas division and maximises value for our stakeholders. Alongside the previous sale of the Flow Control division and the acquisition of ESCO, it is a major milestone in transforming the group into a focused, premium mining technology business.

“It means Weir is ideally positioned to benefit from long-term structural demographic trends and climate change actions, which will increase demand for essential metals that must also be produced more sustainably and efficiently. This will require the innovative engineering and close customer partnerships that define Weir, and it is why we are so excited about the future.”

Joe Creed, Vice President of Caterpillar’s Oil & Gas and Marine division, said: “Combining Weir Oil & Gas’s established pressure pumping and pressure control portfolio with Cat’s engines and transmissions enables us to create additional value for customers. This acquisition will expand our offerings to one of the broadest product lines in the well service industry.”

ESCO brings Nemisys lip system to hydraulic excavator market

ESCO says it is introducing the Nemisys N70 Lip System for hydraulic excavators as it looks to expand the tooth system’s reach beyond the large mining shovels, large excavators and wheel loaders it was initially developed for.

The Nemisys tooth system is a field-proven performer with installations on over 500 machines worldwide, ESCO, which was acquired by Weir in 2018, said. It helps reduce maintenance costs through improved reliability, faster and safer replacement, and improved lip coverage.

The N70 lip system features an integrated single-side lock for easier and faster removal to minimise machine downtime during maintenance cycles. The hammerless lock provides improved engagement with the nose to significantly reduce the chance of point loss and unplanned downtime. Adapters, meanwhile, feature a triple wear cap system to protect both legs.

The Nemisys N70 components are available to upgrade existing buckets to the premier ESCO system for exceptional performance and a lower cost of ownership over conventional lip systems, the company said.

ESCO is a leading designer, manufacturer and provider of highly engineered wear and replacement products and services essential to the performance of our customers’ equipment used in mining, construction and industrial applications.

Weir highlights Enduron HPGR and Terraflow tailings demand in H1 results

The Minerals and ESCO divisions continued to stand out in Weir Group’s half-year 2019 financial results, with the two mining focused segments now representing around 75% of group revenues.

The Weir Group recorded revenue of £1.3 billion ($1.6 billion) in the first six months of the year, up from £1.07 billion a year earlier prior to the ESCO acquisition. Operating profit, meanwhile, was £172 million, up 25% year-on-year, with the Minerals division posting an operating margin of 17.2% and ESCO recording a margin of 14.1% (up 300 basis points from a year earlier).

In addition to Minerals and ESCO now commanding some 75% of group revenues, the two’s recurring aftermarket sales also now represent about 80% of total revenues.

In the first half of 2019, Minerals orders grew 5% with aftermarket orders up 8%, reaching record levels, according to Weir. “Original equipment orders, which are traditionally lumpier, fell by 2% year-on-year, but returned to growth in Q2 (June quarter) and this is expected to accelerate in the second half,” the company said.

ESCO, meanwhile, recorded a 5% increase in pro-forma revenues to £280 million, with annualised cost savings of $20 million ahead of schedule when it comes to the company’s medium-term target of achieving $30 million synergies.

During the period, original equipment demand within the Minerals segment benefited from miners continuing to expand current operations and investment in new mines, with demand for new technologies that increase efficiency and sustainability while lowering total costs, Weir noted.

This included strong demand for the company’s Enduron® HPGR (high pressure grinding roll) technology that reduces water and energy consumption, the company said, adding that the company had been contracted to support a large greenfield development in the UK in the period.

Weir said it also saw growing interest in its Terraflow® solution to enable tailings waste to be cost-effectively recycled or repurposed. This equipment brings wet tailings down to 90% solids paste to be pumped into a containment area or used for paste backfill.

The company added: “Aftermarket demand was strong, due to production growth and structural trends. These include continued ore grade declines that increase the amount of rock that needs to be processed, intensifying wear and tear and leading to additional demand for spares and services,” the company added.

During the period, Weir also added a new Minerals service facility in Alaska, which, it said, gives the division the ability to rapidly respond to demand for spares and services and is a “key differentiator in need-it-now mining markets, where production intensity is increasing, and the costs of unplanned downtime are significant”.

The company’s technology work continued to focus on incremental innovations and “Mine of the Future developments” aimed at solutions that are smarter, more efficient and sustainable, Weir said. This included focusing research and development on new pump and alloy designs, digitisation, ore hoisting, hybrid separation and tailings management.

Weir ESCO benefited from the same macro mining trends as its Minerals segment including increased ore production and the focus by mining customers on optimising productivity, the company said.

“This supported demand for differentiated technology that is proven to sustainably increase efficiency,” it said.
The first half of the year saw early market share gains for the N70 Nemisys® lip system, which extends the division’s Nemisys technology – featuring a cast or plate lip with shrouds and a three-piece tooth system. This is currently being trialled on smaller machine classes including wheel loaders, Weir said. “The N70 improves customer productivity through increased wear life, lower fuel consumption and reduced maintenance costs.”

The company also launched its GET Detect System during the period, an innovation it worked with Australia’s Mining3 on that provides instant feedback to the machine operator if one of the ground engaging tools used to extract minerals is lost or damaged.

First Reserve becomes new owner of Weir’s Flow Control division

The Weir Group says it has completed the sale of its Flow Control division to First Reserve for an enterprise value of £275 million ($343 million).

The deal, which was first announced on February 25, completed on June 28, the company confirmed.

The Flow Control division primarily provides highly engineered pumps, valves and other solutions used in power, industrial and downstream oil and gas applications, according to Weir.

Back in February, the company said the sale would effectively strengthen its mining and oil & gas ties: “Once this transaction completes, on a pro forma basis, more than 80% of Weir’s revenues will be from attractive aftermarket-intensive mining and upstream oil and gas markets.”

Weir Group CEO, Jon Stanton, said: “The sale of the Flow Control division marks an important step in successfully delivering our strategy. It means Weir is now a more focused business with strong positions in premium upstream mining and oil and gas markets around the world.”

The £275 million enterprise value price is subject to customary working capital and debt-like adjustments, Weir clarified.

Demand for ground engaging tools leads Weir to invest in ESCO Newton plant

The Weir Group says it is investing an additional $15 million in its Newton manufacturing facility, in Mississippi, US, as part of a total $50-million plan to support an additional 150 jobs at the ESCO division plant.

When the investment programme is complete, employee numbers will be more than 400, a 60% increase from 2016, Weir Group said.

The Newton facility, one of Weir’s largest manufacturing operations, produces ground engaging tools for mining and infrastructure needs and was brought into the group with last year’s acquisition of ESCO. The expansion is slated to be complete by August 2019, Weir Group said.

Weir Group CEO, Jon Stanton, said: “The equipment we make in Mississippi is exported around the world and the increased demand from our mining and infrastructure customers gives us great confidence in the future.”

The Mississippi Development Authority (MDA) is providing assistance for workforce training, as well as statutory tax exemptions, according to Weir.

MDA Executive Director Glenn McCullough, Jr, said: “The Weir Group’s ESCO division with its talented employees show the world each day that global manufacturing leaders find the people and place needed for success in Mississippi. For nearly 50 years, ESCO’s workforce has enabled the company to achieve its goals by producing top-quality mining equipment used around the world, and this continued corporate investment demonstrates Weir’s commitment to doing business in our state.”

Approximately 80% of the products manufactured at the Newton facility are exported. This makes Weir’s ESCO division the world’s leading supplier of ground engaging tools for the mining industry, Weir said. The facility began operations in Newton in 1971.

Weir ESCO and Mining3 working on commercialising tramp metal detection system

Mining3 says an innovative tramp metal detection system – built into the bucket of mining equipment – is nearing commercialisation.

The company has been working on the new technology over the past few years subsequent to safety concerns and crusher damage caused by tramp metal such as bucket teeth, drill bits, tools and more, often remaining in mined material, it said. This can cause a loss of production and pose a significant safety threat to operators and maintainers.

Mining3 is working with Weir ESCO, an equipment metal parts manufacturer, for the incorporation of the uncrushables technology into its bucket design and will facilitate the commercialisation of the technology, Mining3 said.

“With the new patented uncrushables detection system, obstructive tramp metal can be identified and diverted before reaching the processing plant,” Mining3 said. “A pulse induction metal detector embedded inside the large steel bucket of a digging machine takes on the difficult task of detecting metal items scattered throughout the material. The system’s variable sensitivity is tuned for an object’s target size, focusing on larger, more obstructive uncrushables and allowing for the removal of smaller items further down the processing line. Further, the detection algorithm accommodates changes in ore grade and identifies the type of object.”

When metal is detected, the operator is alerted in real time, allowing for the necessary next steps – usually the dumping and diverting of the material, Mining3 said. In addition to the operator alert, the system integrates into a control centre interface and allows remote management and monitoring of the process.

The tramp metal detection approach requires minimal sensing equipment in the bucket and commercial versions will discreetly integrate the coil into the design, according to Mining3.

Successful site trials have led the project to integrate with larger and more technical machinery. Current prototypes are installed on Komatsu WA1200, Cat 992K, 993K and 994K machines operating on run-of-mine stockpiles in iron ore, gold and copper mines across the globe. Mining3’s research is now focused on deployability, robustness and optimisation, it said.

Weir strengthens mining and oil & gas ties with Flow Control sale

The Weir Group has entered into an agreement to sell its Flow Control division to First Reserve, a global private equity investment firm focused exclusively on energy, for an enterprise value of £275 million ($360 million).

Weir, which will receive cash for the sales, said all the way back in April 2018 that it planned to sell the division. The admission came alongside the acquisition of ESCO. The transaction remains subject to certain regulatory and other approvals, with completion expected in the June quarter, the company said.

The Flow Control division primarily provides highly engineered pumps, valves and other solutions used in power, industrial and downstream oil and gas applications, according to Weir.

Weir said: “Once this transaction completes, on a pro forma basis, more than 80% of Weir’s revenues will be from attractive aftermarket-intensive mining and upstream oil and gas markets.”

Weir Group CEO, Jon Stanton, said: “The decision to sell Flow Control is part of Weir’s recent portfolio transformation which focuses the group on where we can maximise long-term value – building on our strong global leadership positions in mining and upstream oil and gas markets.”

Jeff Quake and Neil Hartley, Managing Directors of First Reserve, said: “In our view, Weir Flow Control represents an attractive growth platform in a fragmented sector, with internationally recognised brands driven by recurring high-margin aftermarket parts and services which have proven to be resilient through multiple economic environments.”

After the sale completes, Flow Control will continue to be led by current President David Paradis and his management team, Weir said.

In the year to December 31, 2018, Flow Control’s unaudited financial results included profit before tax of £23 million on a pre-exceptional items and intangibles amortisation basis.

Weir sees strong demand for brownfield mine solutions in H1 results

Weir Minerals clocked a solid performance in the first half of 2018 and was ably supported by strong demand for new equipment and aftermarket services from its Minerals division.

The company’s orders from continuing operations (minus its Flow Control division) were up 20% year-on-year in the six month period at £1.17 billion, while operating profit jumped 38% to £160 million.

Minerals orders increased 12% to £728 million, with original equipment orders up 9% (£222 million) and aftermarket orders up 14% (£728 million). Operating profit within the division rose 13% to £112 million.

While its Minerals division performed well, its Oil & Gas division topped it with a 35% year-on-year order jump to £438 million as North American upstream oil and gas markets grew strongly.

Weir said: “Activity in mining markets continued to grow strongly as customers ramped up production to maximise the benefits of supportive commodity prices. Demand was particularly good for brownfield solutions that help debottleneck, increase throughput and reduce downtime of existing mines.”

The pipeline of new projects continued to increase driven by good long-term fundamentals for commodities such as copper, gold and lithium, the company said.

“Customers remained disciplined about committing to new greenfield developments, although a small number of projects received final approval.”

Weir said its early investment in deploying more engineers to customer sites to help miners improve productivity had continued to support strong order growth in the first six months of the year with sales from integrated solutions, which leverage the division’s portfolio of premium products, delivering around £50 million in additional orders. Weir noted engineers completed 374 site audits in the period.

“The division also continued to grow market share through its successful trials programme that sees it go head to head with competitor products to demonstrate the superior performance of Weir equipment,” the company said.

The first half also saw the opening of additional service centres in Zambia, Chile and Peru to further extend Weir’s service network.

Weir’s technology programmes focused on continuous improvement in the division’s core products while also developing its Synertrex® IoT solution. Weir said full commercialisation of this technology in mining markets was planned for the second half of the year.

Synertrex uses network connectivity to capture equipment data and relay it to service centres, service technicians, their customers and Weir’s design centres for trend monitoring, proactive components supply and product improvement.

After the end of the quarter, Weir completed the acquisition of Esco Corp in a deal that came with an enterprise value of $1.29 billion.