Komatsu cuts profit target as mining demand drops

Weak demand in the resource sector has forced mining equipment manufacturer Komatsu to cut its full-year operating profit forecast by a third to $2.16 billion.

Komatsu said the drop in demand for mining equipment had been worse than expected, stating it expects operating profit for the year to next March to total 210 billion yen ($2.16 billion), down from its prior forecast of 305 billion yen.

"The tough mining market prompted us to cut our outlook," Komatsu chief financial officer Mikio Fujitsuka said in Tokyo.

The company said demand from Latin America, Indonesia and Australia had waned, but that growth in Japan and China was expected.

Heavy equipment maker Caterpillar has also cut its full-year profit forecast, blaming weak demand for mining equipment.

BHP and Rio are among Komatsu customers who have announced billions of dollars worth of cuts to capital expenditure over the coming years.

Hire and Rental: Getting equipment on site, online

Hire and rental companies traditionally provide miners with equipment they don’t need to own. 

With mining companies after work platforms, cranes, heavy machinery or cars, the hire and rental industry exploded with the boom and is reportedly worth $4 billion, with rental equipment the most sought after when it comes to the mining sector. 

However with companies often looking to hire very specific equipment for their operations, sourcing the right machinery can often be a time-consuming task.  

Problems around finding the right equipment and attachments, availability of machinery, the location of machinery and the plethora of portals on the net can make sourcing the right equipment for mine sites no easy task.  

Working at a mine site in QLD as a civil engineer, Michael Trusler said he saw the difficulty in sourcing plant and equipment to hire for mine site construction projects. 

“I found the process of finding plant and equipment to hire for the mine sites to be disjointed and difficult,” said Trusler.  

“One reason for this was the amount of safety features and attachments which are required for any one piece of equipment,” he explained.  

Trusler said the lack of availability was also an issue.  

Seeing a gap in the market, Trusler developed an online portal which lists over 400,000 pieces of plant and machinery for hire from more than 700 companies Australia-wide. 

PlantMiner.com.au has been live for three months, and in that time Trusler said it has already received over $20 million of quote requests and enquiries. 

The site presents itself as a one-stop shop for the procurement of plant and hire equipment, stating that there is no longer the need for procurement officers to trawl through thousands of Google and Yellow Pages listings to find what exactly what they’re after.  

“It’s not easy,” a promotional video on the site states. 

“You need one place that does it all for you where you can quickly search for all your plant and equipment needs along with their safety features and attachments.”  

The site works by connecting searchers with the specific plant and equipment for hire that they are looking for, right down to all of the safety features and attachments. 

The search functionality of the site features a location tracker so users are able to see exactly what plant and machinery is immediately available to them in their region.  

While a safety features tab means users can update their search with specific requirements including BMA compliance, hand/safety rails, and mine spec just to name a few.  

Search results then include the availability of equipment and machinery along with pictures, specs, descriptions and the direct contact details of the plant and equipment supplier so users can contact them.  

Expressions of interest can also be sent from the site, as well as tender documents.  

Users can also opt to send a direct enquiry where the supplier will be notified by SMS or email and get back to them.  

The site says it can save businesses time and money by having plant and hire equipment needs in one place.  

Trusler said the site is a highly specialised platform built specifically for searching and screening plant equipment for hire.  

From portaloos to 100-tonne excavators – the website caters for all the equipment. 

The easy-to-use portal breaks down into categories everything a mine site may need including forklifts, generators, lighting, site amenities, excavators and light vehicles.  

While specific industry categories features lists of all the equipment imaginable in that sector.  
For example the ‘mining and construction’ category features graders, chutes, water trucks, tractors and tanks just to name a few.  

While the oil and gas category also shows a list of equipment to hire including dredging hire, misc pump hire and piling equipment.  

And with many companies preferring to stay loyal to the tried and tested, popular brands such as Bell, CAT, Kenworth, Manitou, Hitachi, Crown and Volvo are also listed for users.  

Not only does the site benefit those looking for gear, but also hire and rental companies who may have been affected by the downturn in the mining sector.  

The portal puts hire and rental companies equipment right in front of the eyes of key decision makers – with high quality photos and company logos featuring heavily throughout the differing categories.  

With the initial success of the portal in Australia, Trusler hopes to expand the site into the U.S.A, Eur­ope, and Asian markets this year.

A trip to the new-look, $32 million Veyance factory

Built for a generation

“You make an investment in a piece of equipment like this you’re investing for no less than 30 years,” said John Hamilton, the CEO since 2010 of Veyance Technologies, the US parent company of Veyance Belting.

Veyance Belting has just finished upgrading its Bayswater, Victoria facility after 18 months and a cost of about $32 million. Hamilton shrugged off any suggestion that such an investment might

not have been a great idea in light of the apparent waning in enthusiasm for commodities, with coal and iron ore miners making up about 80 to 85 per cent of Veyance’s customer base.

“Iron ore mining will ebb and flow as commodity prices ebb and flow but it’s always ebbing and flowing on a very strong upwards trajectory,” Hamilton, who travelled out from Oklahoma, told Manufacturers’ Monthly at the facility’s opening.

“All of the independent studies that look at the demand for iron ore, all of the studies that look at the grade of iron ore and the quality of iron ore relative to other parts of the world, the demand in China and the demand for Chinese manufacturing for export all say iron ore is on a strong upward trajectory.

“I’d also feel good about coal. I know coal has its detractors at the moment and it also has its energy competitors, like shale gas, especially where I am. But it’s a very cost-effective source of electricity… So coal is always going to be an essential part of any country’s energy mix, and again the independent studies say it’s going up.”

The upgrade to the Bayswater site – which was first considered in 2002 but rejected by the American parent company, before eventually being successfully pitched in 2011 – has been driven by long-term goals.

“So if [mining] goes up and down in any given year: don’t care,” said Hamilton. “Because we’re investing for a 30-year timeframe.”

The right chemistry matters

Veyance, which leads its market in Australia and several other countries, puts its position down to providing a better value to its customers than anybody else can. It makes a point of mixing its rubber compounds and polymers – which are purchased in US dollars, which adds to its competitiveness while the dollar remains historically strong – in-house.

“That’s one of the things that really distinguishes us,” Veyance Belting’s general manager, David Stone, told Manufacturers’ Monthly.

“You can have the best press in the world, but it’s all about how you process those polymers. The press delivers you a means to produce the technology.”

Though the factory’s capabilities have been greatly strengthened in the upgrade, this would not matter without the company’s materials science expertise.

“The technology that goes into it is those different mixes of compounds,” said Stone.

The company employs something like 120 chemists around the world, tweaking and creating the compounds that will determine how well a belt’s surface will do things such as minimise the energy spent moving ore (or other things), rule out static, resist heat damage, and withstand damage caused by having huge amounts of iron ore constantly smashed up against it.

“If you’re looking at it from a customer’s point of view, a mine or even a port, the biggest energy consumer in the operation are conveyor systems,” noted Stone.

“So we’ve been listening to them and delivering rubber compounds with low-rolling resistance, which means that there’s less energy to try and push over the idlers. So it’s very much critical to be in control of that process, designing it, mixing it having control of the whole end-to-end process.”

Stone points out that conveyor belt technology (and its associated services, which Veyance also offer) is not a simple commodity; if this were the case it could be created by anybody.

Veyance also develops compounds tailored to clients’ needs, such as those used in the incredibly lengthy belts for the Curragh Overland Project.

“If you look at the technology required to make these you see today the technology required, the polymers, the rubber design which we do, the actual manufacturing process – it’s not just a straightforward product,” he added.

“So I suppose the way our customers view it, while some of it’s a base price, it’s really the total package and what value we deliver to them.”

Helping Victoria move

Though most business comes from iron ore and coal miners, there are numerous other industries among Veyance’s client list.

“These conveyor belts are absolutely vital to the development and the economy right across Victoria and Australia,” offered Victorian premier Denis Napthine, who, like Stone and Hamilton, helped cut the ribbon at the factory.

“I see these conveyor belts that are made here used in my home patch at Portland Aluminium, where they’re conveying a 4 km conveyor, conveying the alumina, shifting up to the Portland aluminium smelter.

“I see them each and every day at the port of Portland, conveying both hardwood and softwood woodchips from our stockpiles on the ships going to Thailand, Japan and Korea. I see them being used exporting our grain products. Of course a big part of the industry are the massive conveyor belts that are used in the mining industry in our north, with black coal, with iron ore and of course, in our own Latrobe Valley, with brown coal.”

Napthine was happy to list Veyance, which employs 173 people at its Bayswater site and has been operating in Australia since 1965, as one of his state’s manufacturing success stories, helping fuel power needs and move the state’s exports.

“This highlights, once again, that there is an important role for our manufacturing industry in this state,” he added, pointing out that Victoria currently employs more in the sector than it did two-and-a-half years ago.

Manufacturing also contributes significantly to industry gross value-add, with the premier putting this at $27 billion for 2011-12 alone.

“So there is a role and a great future for manufacturing, but it’s manufacturing of the type we’re talking about today: highly skilled, highly technical, world’s best practise manufacturing, advanced manufacturing that is servicing local needs and creating opportunities.”

Ramping things up

The upgrade project – which aims to double Veyance’s overall capacity by about 50 per cent, according to Stone, with earlier reports suggesting it will double the production of belts for its Flexsteel product – is being driven by local demand.

The boost in capacity is put down to three main investments: an investment in increased cranage capacity, a state-of-the-art press for the company’s steel cords, and a new hot former extruder.

The crane capacity investment allows long-length racetrack reels (typically weighing well over 30 tonnes) of coiled belt to be placed on delivery trucks.

he press, by German company Siempelkamp, allows for the individual monitoring of each individually-tensioned steel cord that goes into the company’s belts, with huge productivity benefits along the way.

“What that enables us to do is now manufacture belts now up to ST10,000,” said Stone. “Before our limitation was probably up to about up to ST6,500. Our equipment was only up to two metres wide, this equipment’s now up to 2.6 metres wide.

“And then typically, if you look at the average press around the world, the average length’s about 10 to 11 metres’ length. This is 18.6 metres in length. So you think about then, instead of curing 10 or 11 metres you’re curing 18.6 with the same amount of people, same amount of overhead.”

The demand for steel corded conveyor belts is massive, and Hamilton explained that – not including the company’s Chinese joint venture – the Bayswater factory creates more steel cord than any other in the company’s global network, with the new press to increase things even further.

At the far end of the factory is the hot former extruder, which starts the transition of the carefully-formulated compounds into conveyor belts.

“For our conveyor belt it’s not just the reinforcing material, like the steel cord, that makes a difference,” explained Hamilton.

“It’s the rubber that’s above it and below it, they play very unique roles. The one that’s above it is designed to protect those steel cords from abrasion or impact or things like that. The one below it is what runs on the pulleys and goes around, designed to minimise the energy consumption required to tug that conveyor around the loop.”

Again, both Hamilton and Stone stressed that the upgrades were still considered a sound long-term investment, as has with the recent efforts by the company to move into services in Australia.

For Veyance, the question is “what downturn?”

“For iron ore, if you speak to people like BHP and Fortescue, iron ore will typically chew through conveyor belts every two to three years, so you think about the installed capacity over the last six years, seven years of projects,” said Stone. “Really the installed capacity of conveyor belts out in the field has increased ten-fold in the last ten years.

“I spoke to BHP yesterday and they’re saying, ‘What’s the problem? We’re still shipping as much as we can get out of the ground.’ It doesn’t really matter about the price, that’s irrelevant, as they point out, ‘We’re still using conveyor belts and nothing’s going to change.’”

Coal explorer in talks with Aurizon as mine development ramps up

Queensland coal explorer International Coal has announced it is in discussions with Aurizon over a rail access deal for its Consuelo project in the Bowen Basin.

The project, located just 25 kms from an existing rail haulage line on the Blackwater system, is slated to start production in late 2016, with an exploration target of between 800 million and 1,700 million tonnes of high grade coal.

International Coal says one of its main advantages over other explorers is its proximity to existing rail infrastructure.

“Planning and negotiation of infrastructure access often requires extensive lead times. In order to keep on track with our exploration and development schedule, we need to move early to shore up access to infrastructure either through direct means or through secondary contracts,” chief executive officer Glenn Simpson said.

“We are not locking anything in yet but we need to start a dialogue so that it is all systems go if our exploration comes up as expected.”

Consuelo has open–cut and underground potential and the company hope to achieve rapid development of the project, International Coal said.

The company also confirmed talks have commenced with key proponents associated with the Wiggins Island Coal Export Terminal which is currently under construction.

NT iron ore project ships first load to China

A new iron ore mine in the Northern Territory shipped its first load to China yesterday for testing in steel mills.

Sherwin Iron is operating a project in NT’s Roper River region, 475 km south east of Darwin.

ABC reports the miner has worked for months to stockpile its ore at the East Arm Wharf, before loading its first 70,000 tonne shipment.

Yesterday’s load was the first of three headed for China where testing will take place in three steel mills.

If the ore meets the requirements of the mills, Sherwin Iron are expected to start full production in 2015.

The first ore exported is classified as a bulk sample, and as such the company was not required to submit an environmental impact statement to extract it.

The Northern Territory’s Minister for Mines and Energy, Willem Westra van Holthe, said the process was not uncommon.

"We have allowed a bulk sample to come out (of this mine), because it's simply that, a sample, it's not full-blown mining and the relative disturbance to the ground is quite small," he said.

"It allows the company to assess the economics of the project by being able to pull some ore out of the ground, send it across to to be smelted and tested to see whether China actually wants this stuff."

Sherwin Iron has said the mine will export 200 million tonnes over its 20-year lifespan.

Westra van Holthe said the operation would prove a beneficial for the state.

"This project will see the employment of up to 300 people when it's fully operational," he said.

"The Territory Government is fully committed to doing whatever it can to see this project succeed.

"The level of economic activity in the Roper region is encouraging and I look forward to seeing the long-term benefits the mine site brings to the Roper region."

 

Whitehaven awards Leighton rail contract

Whitehaven Coal has awarded Leighton Contractors its infrastructure construction contract.

The contract will see Leighton build the rail loop for its Maules Creek coal mine.

"The rail loop is a key part of the mine infrastructure and the longest lead time item for the project," Whitehaven said in a statement.

Paul Flynn, Whitehaven's CEO, said "this is a very important milestone for Whitehaven's Maules Creek project; once the mine begins production in the first quarter of CY 2015 it will strengthen the company's position as a major low cost coal producer".

The Maules Creek project has seen opposition for the local community.

Mining exports set to surge, Gov says

Australia’s resources sector is transitioning from a construction to a production phase which Industry Minister Ian Macfarlane says will deliver “serious money” and boost exports.
The Bureau of Resources and Energy Economics said while construction across the resources sector has slowed, production continues to ramp up.
BREE predicts Australia’s export revenues will jump about 60 per cent over the next five years, growing at an annual rate of 7 per cent to total $284 billion in 2017, Business Spectator reports.
It expects growth to be fuelled by LNG and iron ore exports as well as a lower Australian dollar exchange rate.
 “Growth in export revenue will be driven by two main factors: substantial growth in bulk commodity export volumes, particularly for LNG and iron ore; and a lower Australian dollar exchange rate,” BREE said.
LNG exports are expected to increase by 360 per cent to around $65 billion over the outlook period as “large investments in new facilities over the past three years start production” the report said.
"Australia will shortly become the second largest – or optimistically, the largest exporter – of LNG and that is nothing short of amazing," Macfarlane said.
But BREE warns uncertainty around rising domestic production costs and productivity could affect Australia’s export growth in the medium term.
“Policy decisions in Australia will have an increasingly important role in supporting growth in its resources and energy sectors,” BREE executive director Bruce Wilson said.
In its September report, BREE said it expects metallurgical coal exports to reach $35 billion in 2017/18, growing at an annual rate of 3.2 per cent.
Thermal coal exports are also predicted to increase, exceeding $24 billion in five years’ time.
According to BREE the surge of coal exports will be more than enough to combat the anticipated drop in the coal price.
“Although prices for most commodities are expected to moderate over the outlook period, the projected substantial growth in export volumes of Australia’s key commodities will support growth in export earnings,” BREE said.

Miners butt heads in the Pilbara over rail access

Fortescue Metals Groups is appealing a ruling which forces it to negotiate with its Pilbara neighbour Brockman Mining over access to railway infrastructure.
Brockman Mining is seeking access to the Pilbara railway, owned by FMG subsidiary The Pilbara Infrastructure [TPI], under third-party access laws.
The Economical Regulation Authority recently stipulated a price range for the two parties to negotiate within but FMG is refusing to play ball, launching legal action against the ERA in the Supreme Court of Western Australia.
FMG is seeking a judicial review of the ERA’s determination of floor and ceiling costs and its decision to approve negotiations between it and Brockman Mining.
“We believe the ERA has made errors in its determination of the floor and ceiling costs,” FMG chief executive officer Nev Power said.
The ERA rejected TPI’s cost claims of $575.6 million, to set a minimum annual price of $84.7 million and a maximum of $316.9 million from all line users – including FMG, The West Australian reports.
Power said TPI is within its rights to challenge the outcome and said the company has a duty to its shareholders to do so.
FMG said it is also commencing proceedings against Brockman’s proposal for access to the railway, claiming it is “invalid”.
The company said it believes Brockman is seeking an option to access TPI’s railway at some future time, arguing that Brockman is not capable of entering into a binding agreement to use and pay for use of TPI’s railway.
"TPI cannot be expected to subsidise third party projects that are uneconomic," Power said.

Minprovise awarded multiple ISO certifications

Minprovise, a specialist supplier of products and services to the mining, oil & gas and construction industries in Australia has been awarded four certifications of its management systems by Det Norske Veritas (DNV).

The four certifications awarded – ISO 9001, ISO 14001, OHSAS 18001 and AS/NZS 4801 – are valid for design, engineering, manufacturing, sales, services and repairs of mining and oil and gas industrial machinery and equipment, work platforms, transport frames, lifting devices, bins, feed chutes and steel structures. 

Minprovise received the certification following extensive and comprehensive examinations and checks by highly qualified DNV staff of the company’s systems, procedures and protocols, many of which were developed by the company itself.

Minprovise is an Australian owned company dedicated to increased safety, efficiency and risk prevention within the mining and resources industries. 

Rio Tinto loads first ship from the largest integrated mining project in Australia

Rio Tinto has loaded its first shipment of iron ore from its newly expanded  port, rail, and mine operations in Western Australia.

According to the miner this shipment marks the commencement of the commissioning of the expansion program which is aimed at increasing overall capacity of its iron ore operations to 290 million tonnes per year.

Rio’s iron ore chief, Andrew Harding, said “the 290 project is the largest integrated mining project in Australia; the delivery of 290 ahead of its original schedule and within budget is a testament to our focus on value driven growth of our low-cost operations”.

“Given the demanding operating environment in Western Australia over the recent period, this stands as a noteworthy achievement.”

The miner is now focused on the ramp-up to full production rates, and the gradual integration of its ‘Mine of the Future’ automation and remote control program.

The second phase of the expansion will see capacity increase to 360 million tonnes annually.
On top of this are additional options for mine capacity growth including incremental tonnes for low-cost productivity improvements, expansion of existing mines, and the potential development of new mines.

Rio’s first shipment left on the Tai Shan, a cape class vessel carrying around 165 000 tonnes of Pilbara Blend fines.
It is bound for Nippon Steel & Sumitomo Metal Corporation’s Kimistu works in Japan.

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