Domestic and foreign mining
equipment companies
can look forward to a period
of stable growth in India
during the next two to three years,
industry experts feel. Their optimism
is built upon the revival of
the mining industry in recent
months, and with it, resurgence in
the demand for "high-end and
cost-effective" mining equipment.
"The mining sector has been
expanding at 3-4 per cent yearly,
and this growth is expected to
continue in many of the key mining
regions of the world with
India, China, Australia and Brazil
pushing the tempo," Michael W.
Sutherlin, President & CEO, Joy
Global, Inc., a worldwide leader
in surface and underground mining
equipment, observes in his
company's latest annual report.
The new mining policy, which is
still in the making, is set to galvanise
the mining sector, reduce
administrative delays and expedite
mining leases, developments
that bode well for the sector.
The size of the mining and construction
equipment market in
emerging economies has expanded
significantly and now accounts
for 50 per cent of the global market
against just 35 per cent in 2004,
credit rating agency ICRA Ltd
points out in a special report.
"The Indian market grew by over
30 per cent annually during this
period but on a significantly lower
base than in other major countries.
The key growth drivers were
strong economic development,
government and private investments
in infrastructure, large government
projects, high commodity
prices (supporting mining
activity), the booming real estate
industry, and growing levels of
mechanisation," ICRA states.
Currently, the mining, irrigation
and other infrastructure segments
together account for nearly 50 per
cent of the volumes in the Indian
MCE sector. According to ICRA,
mining comprises three key products:
coal (around 50 per cent of
the volumes mined in the country),
iron ore (around 22 per cent)
and limestone (20 per cent).
The government and public sector
undertakings account for more
than 90 per cent of coal mining
activity, around 25 per cent of iron
ore mining, and negligible mining.
"With ample coal reserves
and the ongoing power deficit,
coal mining by PSUs has continued
to grow at a steady pace, thus
providing regular demand for
mining equipment," ICRA notes.
The Indian mining industry consists
of a large number of small
operational mines. According to
the Ministry of Mines, as many as
2,729 mines reported mineral production
(excluding minor minerals,
crude, natural gas and atomic
minerals) in 2009-10 against
2,964 in 2008-09. Out of 2,729
reporting mines, 404 were located
in Andhra Pradesh followed by
Gujarat (398), Jharkhand (284),
Madhya Pradesh (250), Rajasthan
(236), Orissa (220), Karnataka
(209), Maharashtra (145), Tamil
Nadu (138), Chhattisgarh (126)
and West Bengal (111)—accounting
for 92.38 per cent of the total
number of mines in 2009-10.
Among the various mining
companies, public sector Coal
India Ltd and its subsidiaries are
exploring several coal blocks in
various states to augment coal
reserves by 22 billion tonnes
over a period of time (see separate
story). This is expected to
push up sales and rentals of all
kinds of mining equipment.
India has few medium and large
mining equipment companies,
including multinational entities,
in organised sector which manufacture
a variety of surface and
underground mining equipment
such as hydraulic excavators, tippers,
high-capacity trucks, wheel
and backhoe loaders, belt systems,
draglines, highwall miners,
track and rotary blasthole drills
and drill tools, scrapers, motor
graders, rope shovels, crushers,
screens and feeders.
With a positive outlook for the
sector, mining equipment companies
are certain to announce significant
investments in building
new capacities and acquiring new
technology, either singly or in
joint venture.
As Michael W. Sutherlin of Joy
Global, Inc. says, "Based on the
events of 2009, we are more convinced
than ever that mining
will enjoy strong growth over the
long term. If there was ever
doubt about the impact of the
emerging markets, it was
resolved as China single-handedly
mitigated the depth, duration
and severity of the global
economic recession. Based on
almost every measure of commodity
and energy intensity,
China is still in the early innings
and India is on deck."