Mining equipment in Latin America: What does the future hold?
Despite recent struggles in the mining sector, Latin America continues to be an important destination for mining investment, exploration, development and equipment manufacturing.
During 2013, Latin America produced approximately eight percent of the global demand of mining machinery, according to data from Future Market Insights, and its contribution towards global mining equipment sales was registered at 15 percent during that same year.
The mining industry is expected to grow in the next six years as demand and consumption of natural resources, especially metals, continues to increase. The equipment market in Latin America is poised to be a hot spot for mining exploration and investment at a global level.
Hot spot for mining equipment
The region continues to be one of the largest producers of the world’s three most important metals: iron ore, copper and gold.
One of the key reasons growth of the Latin American mining equipment market continues to accelerate is the enhanced demand for these natural resources in recent years. The region currently produces 45 percent of the global copper, 21 percent of the global zinc, 50 percent of the global silver, and 26 percent of the global molybdenum.
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In addition, the introductions of next generation mining equipment such as Autonomous Haulage System (AHS) also serve as driving factors for the growth.
Market segmentation of Latin American mining equipment can be done on the basis of equipment, application and countries. On the basis of equipment, the Latin American mining equipment market includes mineral processing equipment, surface mining equipment, underground mining equipment, mining drills and breakers, crushing and screening equipment, etc. On the basis of applications, the Latin American mining equipment market segmentation includes metal ore mining, coal mining and mineral mining.
The main countries developing their markets have been Argentina, Brazil, Mexico, Chile, Panama, Peru, Ecuador, Colombia, Paraguay, Uruguay, Bolivia and Venezuela.
In addition, foreign investment, especially from China, the United States, Canada and Australia, is expected to play a significant role in the growth of the Latin American mining equipment market.
According to reports, the global mining equipment market will grow at a moderate CAGR of 8.6 percent from 2012 and 2018, and be worth $117 billion by 2018. Latin America is expected to be a major driver for this growth.
The Latin American mining equipment market is largely comprised of Argentina, Brazil, Mexico, Chile, Panama, Peru, Ecuador, Colombia, Paraguay, Uruguay, Bolivia and Venezuela.
Each country is known for its own approach in mining. Chile is known for the adoption and introduction of advanced technologies such as autonomous haulage system. Peru is the reserve of key minerals and has been witnessing a surging demand for copper and hence the expansion of the associated mining equipment market. Brazil has an integrated approach for the production and sale of mining equipment. Panama has an active stock operation (PSO) for the support of the mining industry. In line with the positive future of the Latin American mining equipment industry, Peru and Chile are expected to receive double digit foreign investments in the next six years.
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For mining equipment manufacturers, some of the prominent players include Sandvik AB, Hitachi Construction Machinery, Komatsu Limited, Atlas Copco, Joy Global Inc., Breaker Technology, Astec Industries, Bucyrus International, Caterpillar Inc., China Coal Energy Company Limited, Tecpalsa, Tecmap, Tiesa and Igaretta. Among these, Komatsu Limited in the whole of Latin America, Tecpalsa in Colombia, Tecmap and Tiesa in Panama and Igaretta in Argentina are active players in the Latin American mining equipment market.
In terms of profitability for miners, commodities prices for gold and iron ore aren’t where they should be. However, top mining countries like Peru and Chile are expected to see an increase in the development of mining projects across the region.
According to BNamericas Mining Readers Survey 2014, 44.4 percent of mining company respondents saw Chile as the South American country with the best mining investment climate. Chile was followed by Peru (22.2 percent), Brazil (14.8 percent) and Colombia (7.4% percent).
As the second largest producer of both copper and silver, and the sixth largest producer of gold, Peru is expected to receive $56 billion of investment for mining development.
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One of the most significant challenges will continue to be infrastructure and the need for significant development over the next few years. Willis, a leading global risk advisory organization, reports that Latin America will have to invest about nine percent of its GDP in infrastructure every year from now until 2020 inclusive in order to eliminate the gap between it and South-East Asia.
As of today, Latin America and Asia Pacific are the leading regions in the global mining equipment market on the basis of coal mining, oil refineries, and other underground mining activities. Propelled by the growing mining production and other related sales in China, India, and Indonesia, the mining equipment market is expected to expand remarkably in the next few years.
Coal India Secures First-Of-Its-Kind Digital Deal
Coal India Limited (CIL) has appointed Accenture Solutions to digitally transform seven of its open-cast mines as the company strives to improve performance and increase coal production. Accenture is due to lay down digitalisation groundwork until March 2022.
The deal aims to increase coal production by 100 million tonnes (MT) by the end of FY’23. Once the minimum quantity has been surpassed, an agreed sum will be paid to the consultant for every additional sum of coal produced. This success fee will only be paid on the procurement of the minimum assured quantity.
The move will see heavy earth moving machinery (HEMM) fitted with digital sensors to monitor performance efficiency at all levels. Additionally, modern data analytic techniques aim to increase mine productivity and project monitoring through functional system management and effective observation.
An Exciting Venture For Global Mining
CIL, which aims to provide energy security in an environmentally and socially sustainable manner, hopes the move will help transform the entire business of mining operations and ensure higher volumes of coal are acquired at a lower cost.
“This is a first of its kind initiative by the company utilising digitalisation to ramp up coal output,” CIL has said.
A Digital Step Towards Enhanced Performance
Digitalisation is expected to take place at open-cast mines in Kusmunda, Gevra, Dipka of Southern Eastern Coalfields (SECL), Migahi, Jayant, Dudhichua, and Khadia of Northern Coalfields (NCL). Nearly 32% (188 MT) of CIL’s 596 MT output in FY’21 was accounted for by the seven selected mines. However, this new deal is set to see a large increase following the subsequent digital changes due to be made.
“Learning from the outcome and success of this model, we may replicate it in our other large mines,” says CIL, optimistic about the future following the modernisation of their mining.
It is expected that the move will help address roadblocks and guarantee corrective measures are put into place, ensuring the company is able to move forward with its aim of increasing output whilst remaining sustainable and eco-friendly.