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German manufacturers hit by falling prices

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World Coal,

Falling raw material prices are hitting German mining equipment manufacturers hard. A steep 33% decline in revenue to €3.5 billion is predicted for the current year. Exports will fall by around 34% to €3.2 billion and domestic sales will be reduced by some 20% to about €320 million.

“The industry has reacted to the slump in sales and scaled down production”, stated Dr. Paul Rheinländer, Chairman of the VDMA Mining Association, at the annual press conference in Essen/Germany. “About half the companies are working on short-time now. Some redundancies were unavoidable too”, said Rheinländer.

Mining equipment suppliers aim for growth in 2015.

Manufacturers are hoping that things will improve from the middle of next year and that turnover in 2015 can be at least maintained. The biggest foreign market this year is the Middle East. With a 17 % share of total exports, revenues have almost doubled there. The USA is in second place, followed by Russia, Latin America and China.

Alongside the general uncertainty on world markets, the German domestic market is characterised by a withdrawal from hard coal production. Ruhrkohle AG, operator of the remaining collieries, is continually reducing investment. In addition, the latest major order went to China rather than Germany.

Mining equipment manufacturers are not only suffering from oversupply and price falls. Sanctions against Russia are also hitting them hard. Customers there have turned toward the Far East, China in particular.

In order to reduce their relatively heavy dependency on coal, manufacturers are preparing to enlarge their product portfolios to include machinery and equipment for the extraction and treatment of hard rock. Mineral ores are required to produce the industrial metals used in manufacturing wind turbines, solar panels and cells or biogas plants, and these are mostly extracted in hard rock mining. Companies are counting on a strong increase in demand in this area in the medium term.

Adapted from a press release by Joe Green

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