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Mining is essential to stop climate Change Featured

Mining is essential to stop climate Change (Photo: Helmut Schgeiner, VDMA) Mining is essential to stop climate Change (Photo: Helmut Schgeiner, VDMA)

The mining machinery industry in Germany expects a decline in sales of 10 to 15 percent in 2020. Nevertheless, the industry is optimistic about the future, because only state-of-the-art mining technology will be able to ensure the raw materials needed for climate protection and digitization.

The importance of the mining industry in this context and thus of the machine manufacturers was also emphasized by the Chairman of the VDMA Mining Association, Dr. Michael Schulte Strathaus, during the web annual press conference at the Zeche Zollverein in Essen. Due to the pandemic, no one is currently able to predict how the year 2021 will develop, but Schulte Strathaus is sure that incoming orders and sales will develop positively in the future. "We ensure that raw materials can be mined and processed. Mining equipment is becoming increasingly environmentally friendly and is making its contribution to climate targets, for example through alternative drives and lower energy consumption in mines," he affirmed.

Production and sales developed very well in 2018 and 2019 for the mining companies from Germany; contrary to expectations, new business and thus incoming orders fell sharply at the end of 2019. Added to this were trade conflicts, the crisis in the Middle East and the Brexit crisis, which at the end of 2019 still outshone economic concerns. While the industry was still expecting a subdued development with stagnating sales at best, the corona pandemic put additional pressure on the mining industry.

Over the year 2020, marked by the pandemic, the companies managed to close the interrupted supply chains again and to organize Covid-19-compliant production. They largely switched communication with customers abroad to web-based procedures. By the end of the summer, the industry was sending out very different signals: from virtually unchanged sales plans and expectations to a drop in sales of 30 percent or more. All in all, the industry expects a decline in sales of 10 to 15 percent in 2020. Sales will therefore stabilize at between 4 and 4.5 billion euros.

The EU countries, the USA, Russia, and China remain among the largest export markets. Australia surprised everyone this year and made it to second place among the individual markets, ahead of China and Russia. With an export share of 96 percent, manufacturers in Germany are dependent on foreign business.

In the EU, mining production has remained stable over the last 20 years.  In the summer, the EU Commission announced that it wanted to secure Europe's supply of critical raw materials. To this end, the procurement of raw materials in the EU is to be strengthened.

In the USA, Schulte Strathaus believes that the mining industry is on the brink of upheaval. "With Joe Biden, the country will commit itself to climate neutrality, and large parts of the announced funds of around 2,000 billion USD will be channelled into the development of clean energy technologies. This creates opportunities for our mining equipment manufacturers in Germany. However, they must make more effort to open up new sales areas or expand existing ones," the Chairman reminded the meeting.

Following a very successful 2019 with exports of around 97 million euros, deliveries to Australia fell to 68.8 million euros in the first eight months of this year. Schulte Strathaus was confident that Australian customers would again be more interested in mining technology from Germany from 2021 onwards, as the reluctance to establish new supplier relationships was clearly due to the current corona crisis.

Russia is currently a very difficult market due to sanctions, political disagreements, and the weak Ruble. Travel restrictions and the uncertainty that deliveries from Germany could be stopped at any time make business relations too risky for Russian companies.

In China, coal mining was far ahead of the Chinese mining industry. While the country is recovering from the corona pandemic, the mining sector generated sales of around 309 billion euros and a profit of around 30 billion euros in the first eight months of the current year. Manufacturers from Germany were unable to benefit from this. By August, exports had only reached 67.7 million Euro, a drop of 45 percent. Schulte Strathaus nevertheless sees good chances for a positive development, because China is banking on digitization and unmanned operation in the mines. This is where mining technology from Germany can score points.

In addition to all the technology, social benefits are increasingly becoming the focus of attention for manufacturers of mining machinery. "With our machines we guarantee a climate-friendly and secure supply of high-tech raw materials, because without them there can be no energy transition," Schulte Strathaus confirmed.

The VDMA represents around 3,300 German and European companies in the mechanical and plant engineering sector. The industry stands for innovation, export orientation, medium-sized businesses and employs around four million people in Europe, more than one million of them in Germany alone.

Source: VDMA Mining

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