Mining equipment sales ‘will drop’

BARLOWORLD, Africa’s largest forklift dealer, has forecast that global industry sales of new mining equipment will drop 25% next year after reaching a record in the financial year just ended.

“New equipment sales are cyclical, whereas the sale of new parts and servicing are more static,” CEO Clive Thomson said in Johannesburg last week. “We expect growth in servicing and sales of new parts.”

Expectations for lower unit sales follow a smaller order book in the year ended September 30, Mr Thomson said.

Companies selling mining gear saw record sales this year and Mr Thomson expected new equipment sales to still be ahead of last year’s results, without giving any specific forecasts.

While sales to South African mines contribute about 18% to the company’s profit, Barloworld is not directly affected by the strikes disrupting mines in the country. Most of its customers have opencast operations, rather than underground platinum or gold mines, Mr Thomson said.

About 39% of SA’s gold production was halted last week as strikes in the industry spread. Gold workers, encouraged by a 22% pay increase that ended an unofficial strike at Lonmin, have joined coal miners in walkouts. Barloworld, which has Caterpillar dealerships in Russia, Spain, Portugal and 12 sub-equatorial African countries, expects revenue to rise to about R60bn for the year through September, compared with R49.8bn last year, Mr Thomson said.

Barloworld, which has sold Caterpillar equipment since 1927, bought Bucyrus International’s distribution and support units in SA and Botswana from Peoria, Illinois-based Caterpillar for $175m in July. The company wants to expand in underground mining, Mr Thomson said. It expects the two units to add $335m-$385m to next year’s revenue. Bloomberg