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Monday February 25th, 2019

Komatsu changes its sales growth expectations for the mining industry to ‘moderated’

*Interview included in El Mercurio newspaper edition issued on 12-02-2019.

Although the supplying company foresees the local industry is going to be more active, it will still be less than what it experienced during the last copper price drop.

Komatsu’s expectations towards the mining business growth for this year are limited, following the figures given by the National Mining Association (SONAMI), which aims for a humble 1%, and the copper price, with a variation between 2.95 and 3 USD per pound.

The CEO of the Japanese company and representative for Chile and South America, Yasushi Sakano, states that they expect a fiscal year with a “moderate recovery” in terms of mining operations in the country.

The executive informs that, even when the accumulated amount of all projects is similar to that observed on 2016, it is far from the prosperous levels reached on 2012, with 56,096 MUSD in investment within a five-year period. In fact, according to the last report from the Capital Goods Corporation (CBC), it is estimated that the mining project stocks will add up to 18,530 MUSD.

– Then, the best copper price is not being transmitted to the industry’s suppliers?

– We have been visualizing the recovery of mining equipment’s demand since last year and we estimate this trend will continue through the next years. However, we believe that this increase will be moderated, due to what we talked about fleet renovation. According to Cochilco, the sector will need 530 new mining trucks, while medium-scale mining will require another 130 new units, which will not be used steadily until 2021 – 2022. We all agree that we already hit rock bottom and that there is a recovery, but we are still in the lowest point of the curve.

– Does it replicate through the rest of the continent?

– At regional level, the demand of units during the first months of 2018 had a 32% fall, due to the strong demand drop in Argentina, even though we had a 23% increase in Chile through our construction equipment. For that reason, we expect similar results. We foresee a slight increase in equipment sales and a healthy 5% rise in the Aftermarket area.

– How much are you going to invest in Chile during 2019 and which segment will it be focused on?

– Our main short-term investment is the construction of the new remanufacturing plant in Antofagasta for 21 MUSD, with a six-hectare area which will begin operations during the second semester of 2020. This plant will create 300 new jobs during its construction stage. We also have two facility construction projects for Concepción and Alto Hospicio for a total of 18.3 MUSD. At regional level, we are going to invest 17 MUSD in Barranquilla, Colombia, and 5 MUSD in Mexico.

– How is the fusion process with Joy Global? What level of synergy have you achieved?

– It has been completely positive due to the fact that we increased our product offering. We now have drills, electric rope shovels, and draglines, also a considerable line of oversize loaders complementing our product line.

– It is going to be 10 years since the implementation of autonomous mining trucks, do you think they will fully replace conventional trucks eventually?

– Even though there are more than 140 trucks with autonomous travel system throughout the globe, a fast large-scale implementation cannot be possible for two reasons: the first is that the current fleets are still active in most of the industry and they have to finish their corresponding cycles to avoid altering the operation’s master plan; and the second is a cultural matter, in which every company assesses when they implement the different transformations according to their needs.

However, the presence of technology and robotics in our daily life is increasing considerably. For that reason, the concept of operating autonomous mining trucks is not that far as it was 10 years ago, and is going to be even more common throughout the world soon.

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