INDUSTRY MARKET RESEARCH FOR BUSINESS LEADERS, STRATEGISTS, DECISION MAKERS CLICK TO VIEW

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Mining Equipment in China

Industry Study with Forecasts for 2013 & 2018

Study #2571 | December 2009 | $5200 | 217 pages

The Freedonia Group 767 Beta Drive www.freedoniagroup.com Cleveland, OH • 44143-2326 • USA Toll Free US Tel: 800.927.5900 or +1 440.684.9600 Fax: +1 440.646.0484 E-mail: [email protected] Study #2571 December 2009 Mining Equipment in China $5200 217 Pages Industry Study with Forecasts for 2013 & 2018

Table of Contents MARKETS Mergers & Acquisitions...... 153 Executive Summary Foreign Participation in General...... 83 the Chinese Market...... 155 Coal Mining...... 85 Legal & Regulatory Issues...... 155 Market EnvironmenT Coal Mining Outlook...... 86 Joint Ventures...... 157 Coal Mining Equipment Outlook...... 87 General...... 4 Wholly Owned Foreign Enterprises...... 159 Metal Mining...... 90 Economic Overview...... 5 Representative Offices...... 160 Metal Mining Outlook...... 90 Recent Economic Performance...... 5 Metal Mining Equipment Outlook...... 92 Economic Outlook...... 9 Mineral Mining...... 95 Company Profiles Demographic Overview...... 12 Mineral Mining Outlook...... 95 Population...... 12 Atlas Copco AB...... 163 Mineral Mining Equipment Outlook...... 96 Urbanization...... 15 Bucyrus International Incorporated...... 167

Households...... 16 Caterpillar Incorporated...... 170 Gross Fixed Capital Formation Outlook...... 17 REGIONAL TRENDS Changsha Heavy Industry Science & Technology Development...... 172 Industrialization & Manufacturing Trends..18 General...... 99 Construction Outlook...... 21 China Coal Energy...... 173 Regional Demographic/Economic Trends 101 China First Heavy Industries...... 175 Residential Building...... 24 Population Patterns...... 102 Nonresidential Building...... 27 China National Erzhong Group...... 176 Economic Outlook...... 104 CITIC Group...... 177 Nonbuilding Construction...... 28 Regional Gross Fixed Capital Formation... 105 Electricity Generation...... 30 Guangxi Liugong Machinery...... 178 Regional Construction Expenditures...... 107 Hebei Jinma Mine Machinery...... 179 Mining Outlook...... 33 Regional Mined Product Output...... 109 Coal...... 35 Henan Songshan Heavy Industry...... 180 Regional Mining Equipment Demand...... 111 Inner Mongolia North Heavy Industries... 181 Metals...... 37 Central-North...... 114 Minerals...... 38 International Mining Machinery...... 182 Overview...... 114 Jiangsu Pengfei Group...... 183 Pricing Trends...... 39 Mining Equipment Demand...... 116 Mining Equipment Technology Trends...... 40 Joy Global...... 184 Northeast...... 118 Kobe Steel...... 187 Regulatory Environment...... 42 Overview...... 118 World Mining Equipment Market...... 44 Komatsu Limited...... 189 Mining Equipment Demand...... 120 Holdings...... 191 Foreign Trade...... 45 Central-East...... 122 Exports...... 47 Luoyang Baofeng Heavy Mining Overview...... 122 Machinery Manufacturing...... 192 Imports...... 48 Mining Equipment Demand...... 124 The Eleventh Five-Year Plan...... 49 Metso Corporation...... 193 Central-South...... 126 Northern Heavy Industries...... 196 Overview...... 126 Sandvik AB...... 198 PRODUCTS Mining Equipment Demand...... 128 Heavy Industry...... 200 Southwest...... 130 General...... 51 Shandong Mining Machinery...... 202 Overview...... 130 Underground Mining Machinery...... 54 Shandong Shankuang Machinery...... 203 Mining Equipment Demand...... 132 Extraction Equipment...... 57 Shanghai Jianshe Luqiao Machinery...... 204 Northwest...... 134 Augers & Borers...... 59 Shanghai Zhongxing Jiqi Chang...... 205 Overview...... 134 Roadheading Equipment...... 61 Construction Machinery...... 206 Mining Equipment Demand...... 135 Vehicles & Loaders...... 63 Shanxi Pingyang Industry Machinery...... 207 Hoists & Other Equipment...... 64 Machinery...... 208 Surface Mining Machinery...... 66 INDUSTRY STRUCTURE Tangshan Mining & Metallurgical...... 209 Terex Corporation...... 210 Mining Drills...... 68 General...... 138 Tiandi Science & Technology...... 212 Crushing/Pulverizing/Screening Industry Composition...... 138 Xiamen XGMA Machinery...... 213 Equipment...... 70 Market Share...... 142 Xuzhou Construction Machinery...... 214 Crushing Equipment...... 73 Marketing...... 147 Zhejiang Kaishan...... 215 Pulverizing Equipment...... 75 Financial Issues...... 148 Zhengzhou Coal Mining Machinery...... 216 Screening Equipment...... 76 Cooperative Agreements...... 149 Mineral Processing Machinery...... 78 Other Companies Mentioned in Study..... 217 Parts & Attachments...... 80

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List of Tables/Charts 7 Hoists & Other Equipment Supply REGIONAL TRENDS & Demand in China...... 65 1 Population of China by Region....103 Executive Summary 8 Surface Mining Machinery Supply 2 Gross Domestic Product & Demand in China...... 68 1 Summary Table...... 3 of China by Region...... 105 9 Mining Drill Supply & 3 Gross Fixed Capital Formation Demand in China...... 70 Market EnvironmenT in China by Region...... 106 10 Crushing/Pulverizing/Screening 4 Construction Expenditures 1 Gross Domestic Product of China.. 12 Equipment Supply & in China by Region...... 109 2 Population of China...... 14 Demand in China...... 72 5 Mined Product Shipments Cht Population of China Cht Crushing/Pulverizing/Screening in China by Region...... 111 by Age, 1998-2018...... 14 Equipment Demand in China 6 Mining Equipment Demand 3 Households in China by Region.... 17 by Type, 2008...... 73 in China by Region...... 113 4 Gross Fixed Capital 11 Crushing Equipment Supply Cht Mining Equipment Demand Formation in China...... 18 & Demand in China...... 74 in China by Region, 2008...... 114 5 Manufacturing Value-Added 12 Pulverizing Equipment Supply Cht Central-North Region of China....116 in China...... 21 & Demand in China...... 76 7 Central-North Region of China: 6 Construction Expenditures 13 Screening Equipment Supply Mining Equipment Demand...... 118 in China...... 24 & Demand in China...... 77 Cht Northeast Region of China...... 120 7 Electricity Generation by Generator 14 Mineral Processing Machinery 8 Northeast Region of China: & Fuel Type in China...... 33 Supply & Demand in China...... 80 Mining Equipment Demand...... 122 8 Mining Output in China...... 35 15 Parts & Attachments Supply Cht Central-East Region of China...... 124 9 Mining Equipment Pricing & Demand in China...... 82 Deflators in China...... 40 9 Central-East Region of China: Mining Equipment Demand...... 126 10 World Mining Equipment Demand 45 MARKETS 11 Chinese Foreign Trade Cht Central-South Region of China....128 in Mining Equipment...... 47 1 Mining Equipment Demand 10 Central-South Region of China: by Market in China...... 84 Mining Equipment Demand...... 130 Cht Southwest Region of China...... 132 PRODUCTS Cht Mining Equipment Demand in China by Market, 2008...... 85 11 Southwest Region of China: 1 Mining Equipment Supply 2 Coal Production in China by Type 87 Mining Equipment Demand...... 133 & Demand in China...... 53 3 Coal Mining Market for Cht Northwest Region of China...... 135 Cht Mining Equipment Demand Mining Equipment in China...... 89 12 Northwest Region of China: in China by Type, 2008...... 54 Cht Coal Mining Equipment Market Mining Equipment Demand...... 137 2 Underground Mining Machinery in China by Coal Type, 2008..... 89 Supply & Demand in China...... 56 4 Metal Production INDUSTRY STRUCTURE Cht Underground Mining Machinery in China by Type...... 92 1 Revenue Data: Selected Mining Demand in China by Type, 2008 57 5 Metal Mining Market for Equipment Companies 3 Extraction Equipment Supply Mining Equipment in China...... 94 in China, 2008...... 141 & Demand in China...... 59 Cht Metal Mining Equipment Market Cht Mining Equipment Market Share 4 Auger & Borer Supply in China by Metal Type, 2008.... 94 in China by Company, 2008.....143 & Demand in China...... 61 6 Mineral Production in China 2 Selected Cooperative 5 Roadheading Equipment Supply by Application...... 96 Agreements...... 151 & Demand in China...... 62 7 Mineral Mining Market for 3 Selected Acquisitions 6 Vehicle & Loader Supply Mining Equipment in China...... 98 & Divestitures...... 154 & Demand in China...... 64 Cht Mineral Mining Equipment Market in China by Application, 2008... 98

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Gains will be stimulated by growing demand for mined products from downstream industries such as steel, construction, agriculture, chemicals and the coal-dependent electric utilities.

Demand in China to grow Coal Mining Mining Equipment Demand in China 7.1% yearly through 2013 44% (107 billion yuan, 2008) Demand for mining equipment in China is projected to increase at a 7.1 percent annual rate through 2013 to ¥150.5 photo: China Coal Overseas Development Co., Ltd. billion. Gains will be stimulated by growing demand for mined products from downstream industries such as steel, construction, agriculture, chemi- Metal Mining cals and -- most notably -- the coal- 33% dependent electric utilities. Trends favoring increasing mechanization in Chinese mines will also spur new sales of mining equipment through the forecast period. In addition, the harsh work Mineral Mining 23% environment and limited lifespans of mining equipment will support sales of aftermarket parts and attachments, further fueling market gains.

Crushing, pulverizing, Northwest China to post Metal mining to be screening equipment to strongest gains by region fastest growing market see most rapid increases The resource-rich Central-North is the Coal mining will remain the largest Sales of underground mining machinery largest regional market for mining equipment market through 2013, benefit- are forecast to rise 6.4 percent annually equipment, accounting for 33 percent of ing from increasing demand for coal to ¥44.9 billion in 2013, preserving its total national demand in 2008. Demand resources as raw feedstock for electricity status as the largest mining equipment for mining equipment in the Central- generation and energy for heating and segment in China. However, crushing, North is forecast to grow 7.3 percent per other industrial usages (e.g., steel pulverizing and screening equipment will year through 2013 to ¥51.0 billion, with production). However, demand for see the strongest gains over the forecast gains boosted by further expansion of mining equipment used in metal mining period. Advances will be driven by robust mining activity in the region. Demand for settings will see the strongest gains over increases in demand for preprocessed mining equipment in the Northwest is the forecast period. Advances will be mined products and growing domestic expected to increase 8.5 percent annu- stimulated by increasing metal mining consumption of key commodities such ally through 2013, posting the strongest activity spurred by rising demand from as coal, steel, clay and cement. Surface gains in China. Advances will be spurred downstream industries such as steel and mining machinery will also achieve fast by strong growth in the exploitation of nonferrous metals. sales growth through 2013 due to regional coal reserves over the forecast Copyright 2009 The Freedonia Group, Inc. expanding mineral and metal output. period.

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Sample Text, TABLE III-9 Table & Chart MINING DRILL SUPPLY & DEMAND IN CHINA (million yuan)

Item 1998 2003 2008 2013 2018

Gross Fixed Capital Formation (bil ¥) 2773 5308 12365 19650 32050 ¥ mining eqpt/000¥ GFCF 0.7 0.7 1.7 1.6 1.4

products Mining Drill Demand 1955 3835 21450 30500 44050 Air Powered Rock Drills 725 1525 8260 11050 14800 Crushing/Pulverizing/Screening Equipment Diesel Rock Drills 465 960 4955 6855 9640 Demand for crushing, pulverizing and screening equipment in Hydraulic Drills 365 645 4055 6180 9565 China is expected to rise at a 7.8 percent annual rate through 2013 toElectric Drills 250 sa420 mple2575 4005 6350 ¥21.8 billion, the fastest growth among all mining equipment types. Other Ad- Mining Drills 150 285 1605 2410 3695 vances will be stimulated by solid sagrowthmple in mining output to keep pace table with rising demand for key commodities such as coal, steel and cement. + exports 105 245 2290 4040 5150 In addition, increasingly demanding requirementstext (e.g., higher levels - importsof 130 295 2390 3540 3900 product purity) from downstream processors will also contribute to sales of related equipment going forward. Mining Drill Shipments 1930 3785 21350 31000 45300

Crushing, pulverizing and screening equipment is widely used price deflator (2007=100) 70.8 74.7 118.3 145.5 175.9 in coal, metal and mineral mines to smash, grind and sort mined ores,Mining Drill Shpts (mil 2007¥) 2725 5065 18050 21300 25750 which is important for further processing. Shipments of crushing, pul- verizing and screening equipment are projected to grow 7.6 percent per annum to ¥20.8 billion in 2013. China’s trade deficit in these products will continue to widen, due to the increasing domestic demand for high- end equipment.

Crushing equipment is the largest type in this segment and is expected to remain so through 2013, with new sales fueled by its wide applications throughout the mining industry. However, demand for pulverizing equipment is expected to see the fastest gains going forward, an outcome of rapidly increasing consumption of mineral commodities (especially those used in producing building materials).

Leading domestic suppliers of crushing, pulverizing and screening equipment include China Coal Energy, China First Heavy Industries, CHART VI-1 Northern Heavy Industries Group, Shandong Mining Machinery Group, Shanghai Jianshe Luqiao Machinery and Tiandi Science & Technology.MINING EQUIPMENT MARKET SHARE IN CHINA BY COMPANY Other Chinese manufacturers of these products include CITIC Group, (¥107 billion, 2008) Hebei Jinma Mine Machinery Group, Henan Songshan Heavy Industry, Jiangsu Pengfei Group, Luoyang Baofeng Heavy Mining Machinery, 6.9% Xu zh o u C o n str M ach 70 Copyright 2009 The Freedonia Group, Inc.

5.5% N o rth ern H eav y In d

M a rke t 4.4% C aterp illar O th e rs sample L e a d e rs 6 6 .3 % 3 3 .7 % 4.0% C h in a C o al En erg y chart 3.5% Z h en g zh o u C o al M in in g 3.3% Jo y G lo b al 3.1% In ten atn l M in in g M ach 3.0% T ian d i Sci & T ech

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��������� Sample Profile, CHART V-1 ������������������������������������������������ MINING EQUIPMENT D��EMAN�����������D IN CHINA� BY REGION, 2008 Table & Forecast (¥107 billion)

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�������������� COMPANY PROFILES ����������� �������� �������� ������� ����� ������� Shanghai Jianshe Luqiao Machinery Company Limited ��������� ��� ������� 480 Bansongyuan Rd �� ����� ������� �������� Shanghai, 200011 ������ China ������� ����� ����� ����� ������� 86-21-6313-9054 �������

http://www.shanbao-china.com �������� ��������� sample����� ��� ����� ������� �������� Annual Sales: ¥1.6 billion [US$237 million] (verified by company) ��������� ������� char����t Employment: 1,200 (2008, verified by company, 8/09) ����� ������� ��� sample ������� ������ ������� Key Products: hydraulic drill rigs, shearers, shield supports, crushers, ������� ����� pulverizers, feeders, vibratingpr screensofile and conveyors ������ ��� ���������

International Contact: Mr. Yongwen Weng, Foreign Trade Manager ������

Shanghai Jianshe Luqiao Machinery manufactures mining, metal- ��������������������������������� lurgy, construction, environmental protection, industrial and other equipment mainly sold under the SHANBAO brand name. The Com- pany is a state-owned enterprise.

The Company participates in the Chinese mining equipment industry through the production of such mining machinery as hydrau- lic drill rigs; shearers; shield supports; crushers, including jaw, cone, TABLE IV-5 impact, hammer and roller models; pulverizers; feeders; vibrating screens; and helix and belt conveyors. In particular, hydraulic drill rigs, METAL MINING MARKET FOR MINING EQUIPMENT IN CHINA shearers, shield supports and certain types of crushers are used mainly (million yuan) in coal mines. Item 1998 2003 2008 2013 2018 Shanghai Jianshe Luqiao Machinery maintains a production com- plex in Shanghai, China. The Company serves customers throughout China and 50 other countries and regions in the Asia/Pacific region, Metal Mining Shipments (bil ¥) 65 108 665 770 1170 North and Latin America, and Europe. ¥ mining eqpt/000¥ shpts 41.4 54.4 53.3 66.5 64.4

204 Copyright 2009 The Freedonia Group, Inc. Metal Mining Market 2690 5880sa 35450mple 51200 75400 Ferrous 2285 4970 30050 43200 63300 Common Nonferrous 300 670 3970 5960 9150 Precious & Other 105 240t ab1430le 2040 2950

% metal mining 25.5 25.9 33.1 34.0 34.9 Mining Equipment Demand 10550 22700 107000 150500 216000

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