Mining equipment manufacturer sees growth for new hard rock mining division
Josh Wagner, general manager of Joy Global Inc.’s new hard rock underground mining division, describes the company’s presence in Sudbury as “extremely advantageous.”
“As we see it, Sudbury is the capital of hard rock mining globally,” he said. The city and region are home to some of the largest mining companies in the world, namely Vale and Glencore, boasts a large mining supply sector, academic and research institutions, “and a talent pool we can draw from, which is extremely beneficial for us.”
Joy Global entered the hard rock underground mining equipment market through its purchase of Sudbury-based Mining Technologies International (MTI).
The $51 million deal for MTI’s two manufacturing facilities in Sudbury and a service centre in Billings, Montana, closed May 30th.
The acquisition of MTI is a consequence of Milwaukee-based Joy Global’s strategy of diversifying away from its reliance on the coal industry for which is supplies continuous miners, longwall shearers, powered roof supports, conveyor systems, loaders and roof bolters among other products. Its surface mining division manufactures P&H branded electric shovels, blasthole drills, draglines, wheel loaders, and mobile mining crushers.
Coal in decline
“The market dynamics associated with coal have been in decline over the last few years, so for us to continue our path upward, we need to seek out opportunities for growth, and one of them is the hard rock sector,” said Wagner.
“The purchase of MTI was a great opportunity to acquire a broad-based product portfolio that gives us an immediate entry into the hard rock space,” said Wagner.
The former MTI - now Joy Global’s hard rock division - designs and manufactures hydraulic drills, loaders, trucks, utility vehicles and shaft sinking equipment.
“In addition to the acquisition of MTI assets, we are also working on some organic, transformational- based projects,” said Wagner. “We have some new product development initiatives looking at continuous mining solutions for hard rock.”
The company has partnered with Anglo-American to develop continuous cutting technology for hard rock applications, “but it’s still in what I would call the feasibility stage, or development stage,” said Wagner.
Continuous cutting and material flow, which would replace traditional drill and blast technology and speed up underground development, is the holy grail of the hard rock mining industry and a focus of attention for the Sudbury-based Centre for Excellence in Mining Innovation’s Rio Tinto Centre for Underground Mine Construction.
However, drill and blast technology still dominates in hard rock mining.
“We acquired the business to grow,” said Wagner, who will be relocating to Sudbury with his family as soon as his visa application is approved. “That, in turn, will require investment and new beachheads globally.”
Close to 90 per cent of MTI’s sales were focused on North America. Joy Global, by contrast, sees opportunities for growth overseas.
“Latin America is an extremely large market, especially Chile and Peru. Australia is an important market, as is Africa. We already have a footprint in Russia and Kazakhstan through dealers and sales agents and we’re going to investigate and evaluate our options for growing that business too.”
Standalone business
The hard rock division employs 230 people and will be operated as a standalone business.
“There’s a significant amount of knowledge and skill in the Sudbury facilities and within the business unit today that we need to be able to retain,” said Wagner. “There’s a lot that we can learn to understand this market segment, so it’s critical for us to make sure that we don’t lose that knowledge.”
Joy Global, which has 14,000 employees and 132 locations in 18 countries, reported $5 billion in sales for fiscal 2013, down 11.5 per cent from the previous year. Second quarter 2014 operating profit was $125.7 million, down from $278.6 million for the corresponding period the previous year.
The company attributes the results to oversupplied commodities and low prices that continue to delay capital decisions.
