Mining machinery is being streamlined by its manufacturers as part of a drive to enhance productivity for consumers, according to a published report.
The effort by manufacturers to strengthen the equipment also is designed to offset the precipitous decline of orders for it, Reuters reports. Amid pressure by investors for increased returns, the effort aims to capitalize as much as possible on each dig with a shovel, each grinding effort and each truck load so as to preserve margins that are being tightened by labor expenses and costs for energy. At the same time, prices of commodities are slimming.
The top official with the globe’s biggest miner said during an industry dinner earlier this month that this pursuit is roughly comparable to teams that support car racing. Chief executive officer Andrew Mackenzie with BHP Billiton said some changes have proven to be of benefit to the Formula One pitstop, when cars are stopped for servicing like changing tires. In 2010, that figure was nearly four seconds and earlier this year it was reduced to a bit more than two seconds.
“If we look at our industry, the prize is significant,” the chief executive told his audience during the dinner, according to Reuters. “For us, every 1 percent improvement in productivity translates to a $170 million saving.”
BHP Billiton’s pursuit of various growth and development strategies is founded in the emphasis of its strength in finances, operations and strategy, according to the company’s website.
The Utah People’s Post reports some good news befell BHP Billiton when Bank of America re-issued its buy rating for shares of the company, citing a research report that was distributed earlier this week.
Large changes unlikely
The likelihood of sizable changes to much of the equipment that the company generates is not very high, according to Reuters.
Smaller improvements might prompt some sort of differences for both the industry and firms that provide supplies for the sector as it moves through various mining phases. Manufacturers of equipment have endured the pinch of sharp drops of new mining projects while miners reduce spending.
Caterpillar slashed its profit forecast for this year in April, indicating expectations of sales falling by 50 percent for mining trucks and loaders. Atlas Copco of Sweden saw reductions of mining orders drop 26 percent during the first quarter. Sandvik, also of Sweden, saw mining orders drop by nearly one-third.
Makers of equipment are optimistic about the most recent versions of the equipment they produce appealing to mining consultants and prompting new orders.
“You cannot really improve on the drilling itself,” Ulrich Schoepf of the Deep Drilling division at Bauer Maschinen GmbH told Reuters. “So we make the machines safer, which means less down-time. We make them more fuel-efficient and easier and cheaper to transport.”
Automation grows in popularity
One key change that has grown in popularity during the past few decades is automation. The process has been a key improvement for productivity when it comes to the mining sector.
“I think the whole battle will be in automation,” Chief Executive Officer Ronnie Leten with Atlas Copco told the publication.
Increased service also is a factor that manufacturers of equipment emphasize so as to encourage income to continue flowing.
“You sell a solution that includes services with a focus on productivity,” analyst David Jacobsson with Nordic investment bank Pareto Securities told the news source. “The big benefit here on the mining side is that productivity and what it costs is so extremely measurable … (Manufacturers) can say ‘yes, our product is 30 percent more expensive, but since the downtime is this much lower, your investment will still pay off’.”
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