German mining equipment manufacturers expect 20% more turnover

Despite the financial and sovereign debt crisis, German mining equipment manufacturers have posted a record sales growth of 27% for 2011. The German Engineering Federation (VDMA) expects turnover to grow by a further 20% to € 5.8 billion in 2012.

German mining equipment manufacturers are among the few industries in Germany that have posted growth throughout the entire financial crisis.

The organisation attributes this to the high quality of products and the rise in demand for raw materials. Despite the structure of the industry, which is made up of many small and medium-sized companies, the sector has succeeded in rising up to the challenges associated with exports. Since 2007, the turnover of the approximately 130 German-based mining equipment manufacturers has risen by an average of 13%/year.

2013: Outlook is more circumspect

For the coming year, however, the outlook is more circumspect. The financial and sovereign debt crisis is now also being increasingly felt on markets outside of Europe, as both private and institutional investors act more cautiously and projects are put on hold. Nevertheless, the German equipment manufacturing sector is anticipated to at least retain its turnover and may even increase it. In the medium- and long-term, the sector is poised for further growth.

On the domestic market, revenue will increase by some 15% to € 470 million this year. Manufacturers also look to 2013 with optimism despite the German Government’s decision to phase out domestic hard coal mining. Germany will be entirely dependent on imported coal after the closure of the three last mines. Exploiting domestic resources again in the future will require substantial effort.

Export business to rise by 21% to € 5.33 billion in 2012

Mining equipment manufacturers expect their export business to rise by 21% to € 5.33 billion in 2012. This means that 92% of their total turnover is generated abroad.

The almost 50% drop in sales in China was more than compensated for by growth in other countries. In Australia alone, revenue is expected to grow four-fold. Accounting for 15% of total sales abroad, Australia has become the top export destination for German-manufactured equipment. However, the increase in mining costs caused by Australia’s controversial new Minerals Resources Rent Tax (MRRT) for coal is likely to negatively impact the business next year.

Dr Paul Rheinländer, chairman of the VDMA, explicitly welcomed the raw material partnerships concluded with Mongolia and Kazakhstan. These could not only make an important contribution to domestic raw material supply in the medium- and long-term but also positively impact sales for the industry.

“Future Mongolia”, a capital goods trade fair endorsed by the VDMA that will be hosted in Ulaanbaatar for the second time in June 2013, provides a platform for raising awareness for the industry’s companies and products in the region. As Rheinländer noted, Mongolia is among the world’s most resource-rich countries and therefore promises excellent business opportunities, especially in the medium- to long-term.

Adapted from press release by Jonathan Rowland.