The exports of mining equipment to India reached by Ç16.2 million (Rs 1,254 million) in first nine months of 2014, says Rajesh Nath, Managing Director, VDMA India. Excerpts from the interview...
How do the growth prospects for mining equipment look like especially from the expected growth of coal and mineral mining?
The Indian market is served for many years, not only because of the need of raw materials to foster the nation economic growth but also because India is the third largest producer of coal. Difficult regulatory framework and business environment slow the development of coal production. As in 2014, worldwide exports of machines from Germany decreased by 8 per cent in the first half of the year. The exports of mining equipment to India reached by Ç16.2 million (Rs 1,254 million) in first nine months of 2014. This amount of decrease correlates with the shrinking imports of mining equipment to India of more than 20 per cent last year. This year also the figures are expected to come to the same as last year, without much change.
What has been the overall performance of German OEMs in India connected to mining in 2013 and 2014 fiscal?
After a period of declining business in India, the industry hopes for changes in the Indian economy under the new government, in particular in the energy and mining sector. In general, the volume of exports of mining equipment divides in half over the last five years. Many German companies and VDMA members are planning towards more investments in India. In the construction equipment and building machinery sector as well as the mining machinery sector companies like Liebherr, Schwing Stetter, Putzmeister, Wirtgen, Hess, ZF and Thyssenkrupp to name a few have invested substantially in the last 3-5 years.
How do you look at the trend from first quarter of 2015 and onwards?
Mining growth has consequences for downstream industries such as power generation, steel making and aluminium, and therefore on manufacturing (e.g., auto, chemicals, cement) and infrastructure (road, rail, real estate).
Due to import of iron ore and other raw material, cost of production of steel could increase by 15 per cent. A share of this increase in cost would be transferred to downstream industries resulting in a domino effect. There could be a 4-5 per cent increase in cost of downstream industries thus affecting their competitiveness. By 2025, the output from the mining sector could be 1.5 to 2.5 times of the current levels. In the accelerated growth scenario, an additional $47 billion could be generated annually compared to the business-as-usual scenario. The mining sector could contribute $50 to 80 billion by 2025 to India´s GDP. In an accelerated growth scenario, it could generate an additional $31 billion over the business-as-usual scenario.
What are the technology and product trends in the mining equipment sector?
Over the years it is conspicuous that machines for cutting and milling of minerals always rank number 1 in exports from Germany to India continuously worth Ç5-10 million every year, number 2 and 3 alternately are sorting, screening, sizing and washing machines for minerals and parts of drill rigs and deep well drilling machines. But since 2011, the exports of processing equipment are reduced by 1/3 up to now.
What is the potential for underground mining equipment?
Since 2011, the exports of processing equipment are reduced by 1/3 up to now. It is not probable that the need for processing and beatification of minerals is reduced in the same scale. Beside this fact, it is amazing that no extraction technology has been exported to India for years. In this respect it is of importance that there are not so many underground operations in India but the need for mechanization of underground mining is still essential.
How do you look at the future potential for mining equipment in India?
The latest figures for orders and other signs from the industry however suggest that falling raw material prices has hit mining equipment manufacturers hard. Manufacturers are therefore hoping that things will improve from the middle of next year and that turnover in 2015 can be at least maintained.