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Consolidation among mining suppliers

Mining is a global business and the evolution of the South African sector that services this industry has continued apace. It is reflected in the recent acquisition of Linatex by Weir Minerals, as the latter continues to diversify its offering from a traditional base of slurry pumps. Weir says it plans to double its turnover in the next few years and, having a dominant position in its range of pumps in many of the major mining jurisdictions, the only way it can grow is by expanding its range of offerings.

Similarly you see Barloworld, which is the Caterpillar representative in Southern Africa, representing Metso’s line of mobile crushing and screening plant. In both these cases, Linatex and Metso benefit from well established dealership networks, and this is expected to pay dividends through increased orders. At the same time dealerships look to become more capable of providing a whole suite of products and solutions, rather than single lines of products and services. Once a service network is established it makes sense to leverage that to the whole industry’s benefit.

The general consolidation one sees in the mining supplier and services sector maximises the well known benefit of economics of scale. One also often hears the equally compelling argument that global mining companies prefer to deal with standardised services across their international range of operations. It means their service providers ideally should be substantial global operations capable of meeting their needs whether this is in Ghana, South Africa, New Guinea or Chile.

However, in 2008 many of the companies that service the mining sector were fully stretched to meet their clients’ aspirations, also taking into account that with skills shortages mining companies lean more heavily on their suppliers to provide such skills. Having had the reprieve of the global recession many of these companies are now in a better position, their systems having been refined, and are ready to meet increases in demand.

Many companies describe the year that has past as one where there have been promising signs without the world being set alight, but if there is no major economic relapse, we could be looking forward to a good 2011.

This brings me to this particular edition of Mining Review Africa. Our 12th edition of 2010 is a new project for us. This edition is to a degree a buyer’s guide, though the complexity of the mining sector is such that many of the companies featured would each have and deserve a buyer’s guide in their own right. However, it is an opportunity to turn our focus to the suppliers and service providers to the mining sector, and some of their more recent developments, offerings and contracts.