Against the general trend, German mining equipment manufacturers expect a record year for the current year. The VDMA expects sales to rise by 38 percent to around 5 billion euros. In 2020, revenues should at least be maintained.
In Germany, mining equipment manufacturers are expected to increase their sales by 10 percent to 110 million euros. As the Chairman of VDMA Mining, Dr. Michael Schulte Strathaus, said during the annual press conference at the Zeche Zollverein in Essen, the domestic market has become "rather a marginal phenomenon" due to the decision to phase out lignite-fired power generation and the decreasing opportunities to continue producing domestic raw materials. In addition, the increasingly difficult spatial planning and the over-planning of deposits are becoming more and more important. For the coming year, the VDMA therefore expects domestic revenues to change only slightly at best.
Foreign business looks much more pleasing. Sales are expected to rise this year by 38 percent to around 4.9 billion euros. The export ratio is thus 98 percent. For 2020, the industry assumes that it will at least be able to maintain its revenues. According to Schulte Strathaus, the trade dispute between the USA and China, the renewed postponement of Brexit and the continuing tense situation in the Middle East, which is also having a negative impact on business, are having a negative impact. In the medium and long term, however, the industry expects demand to continue to rise. In this context, the Chairman referred to calculations by the OECD according to which the world population will grow to more than 9 billion people by 2050 and the demand for raw materials will double by 2060, which will have a positive effect on the industry.
To meet the demands of the digital age, mining equipment manufacturers are increasingly relying on machinery and equipment used in hard rock mining. Schulte Strathaus: "This is where many metals are extracted for the digital future. Without them, and thus also without our products, digitization would simply not be possible." Data and energy are the basis for the future - but without raw materials there would be no energy, he stressed.
Sustainability is at the top of the agenda for manufacturers. Schulte Strathaus gave examples from his company's field of activity. The topic was the optimized transport of raw materials from extraction to processing. The conveyor belts and transitions used for this must be designed in such a way that no valuable raw material is lost. In addition to optimised bearings and idlers with low running resistance, a modern material flow control system in the form of intelligent scrapers, chute seals, swivel castors and impact tables, which ensure dust reduction and whereas little material as possible is lost, is required. In addition, according to Schulte Strathaus, a comprehensive digitization of belt conveyors is required in order to record the different aggregate states via sensors regarding predictive maintenance.
Safety is also a very important issue for manufacturers. Here, as Schulte Strathaus continued, German companies are "world leaders". There are hardly any foreign manufacturers "who can hold a candle to us in this respect". This is one of the reasons why mining machines "Made in Germany" are in demand worldwide.
The industry would like to see more commitment from the responsible politicians on the African continent. This is the only way to succeed in defying China there. Schulte Strathaus also regretted that more and more donors are withdrawing from the financing of coal projects. As a result, not only the industry, but also the entire European mechanical engineering sector is suffering. Coal will continue to play an important role as an energy source not only in China and India, but also in many other countries. Although the world needs more renewable energy, at least in the foreseeable future it will not be possible to completely do without conventional energy. Germany now has almost the highest energy prices in the world. It is therefore important to find solutions so that the country does not lose its industrial base, which is so important for its prosperity, due to the extremely high energy prices.
Schulte Strathaus described the shortage of skilled workers in his sector as "dramatic". He called on politicians and society to upgrade their social status. The skilled worker must belong to society and not be excluded, as is increasingly the case today. The Chairman: "A-levels for all do not help us further", he said.
The largest sales market this year is the EU. The 28 member states are expected to account for 25 percent of exports. Last year it was just over 27 percent. The decisive impetus came from France and Great Britain. In addition to these two countries, Schulte Strathaus continued, the raw materials strategy of the EU also made Poland, Greece, Sweden and Spain attractive as sales markets. A further slight increase in exports to the countries of the European Union is expected for 2020.
The second largest export country, with an estimated 12 percent share of total exports, are the USA. In 2018 it was still 15 percent. According to Schulte Strathaus, this is due to a shift in energy policy. Even if the current government makes various efforts to strengthen the traditionally important coal mining industry, the current level can at best be maintained. The importance of coal as an energy supplier is declining continuously. The US coal requirement for energy generation has been reduced by around 40 percent in recent years as a result of the increased use of gas. However, as the country is making many efforts to strengthen not only coal mining but mining as a whole, it is "cautiously optimistic" to at least be able to maintain exports to the USA in the coming year.
Schulte Strathaus named China as the third largest exporting country. The industry expects slightly more than 10 percent of exports to the People's Republic this year. In 2018 the figure was just under 10 percent. As Schulte Strathaus said, China's imports of mining technology have tended to fall since 2012. However, this only applies to a limited extent to mining technology "Made in Germany". A state-supported mining supply industry has indeed emerged in China in recent years. In order to meet their targets, however, the high-performance mines there would primarily rely on German equipment. Schulte Strathaus described the medium-term sales trend as "rather uncertain". Many suppliers are increasingly confronted with non-transparent approval procedures for certain machines and plants. Chinese mining equipment manufacturers increasingly avoided the domestic market, which is saturated in many areas, and intensified competition on foreign markets. This often happens with state-subsidized dumping prices, which German manufacturers can only counter with the quality of their products and services. For 2020, however, it is assumed that the current export level will at least be maintained.
Exports to Russia, the fourth-largest exporting country, have also risen. While last year it was just under 6 percent of total exports, manufacturers are expecting a share of more than 7 percent for the current year. According to Schulte Strathaus, coal is still the basic source of heat and energy in Russia. The country's largest coal mining company, the Siberian Coal Energy Company, speaks of a stable market situation both in Russia and in the other 11 CIS states as well as a clearly growing market in Asia. Russian coal mining companies are currently developing new port facilities in the Far East to meet Asia's growing demand. According to Schulte Strathaus, the signs are "pointing to expansion". The sanctions imposed by the EU could do little to change this, he added. For the coming year, the VDMA therefore expects further increases in exports.
Schulte Strathaus described the situation in Australia as "very pleasing". The share of exports will grow from 2 percent in 2017 to probably 7 percent this year. The country is benefiting greatly from Asia's increasing hunger for energy. The high demand for hard coal is leading to a greater need for efficient and thus cost-reducing equipment. Investments in the mining sector reached a five-year high of 2.5 billion Australian dollars in the second quarter of 2019. The industry therefore expects exports to continue to rise in the coming year. According to Schulte Strathaus, the revived contacts within the framework of the German-Australian Raw Materials Working Group founded in 2017 would also help in this respect.
The chairman described business with the countries of the Near and Middle East as declining. The share of exports is expected to fall from almost 9 percent last year to just under 7 percent this year. Countries such as Saudi Arabia, Oman, but also Qatar would have to save because of the relatively low oil prices, and existing orders had largely been processed. For 2020, it is therefore expected that the current business volume will at best be maintained.
Africa, which was still one of the largest customer regions last year, has lost this position. Schulte Strathaus cited the reasons for this as political uncertainties in addition to rampant corruption and the resulting uncertain framework conditions for investors. Guests from Africa are also expected at the VDMA Industry Meeting Mining to find out more about German mining technology.
As Schulte Strathaus continued to say, Latin America continues to be of interest to German manufacturers. Last year, 30 percent of global investments in mining exploration were made there. The region was also in the spotlight due to its significant copper deposits. According to all forecasts, the price of metal, which is also needed for the energy turnaround, is pointing upwards in the medium- and long term. Mining in Latin America would be opposed less by a lack of demand for raw materials than by resistance to various mining projects. Conflicts with the local population, non-compliance with environmental regulations and political instability repeatedly lead to new projects not being able to start as planned in many places. Nevertheless, Schulte Strathaus expects exports to Latin American countries to remain constant compared with 2018.
Source: VDMA Mining
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