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Tough Time Ahead for Mining Equipment Manufacturers as Imports Fall for Second Consecutive Month

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Published on : Dec 24, 2015

Increasing mining activities across developing countries has boosted the growth of the global mining equipment market. Availability of technologically advanced equipment, coupled with growing demand for commodities and fertilizer minerals has accelerated the growth of the market in the past couple of years. Extensive underground mining and surface mining in developing nations have propelled the demand for mining drills and beakers. The market has witnessed mergers and acquisitions among the key players who are focussed on research and innovation of mining equipment. However, lately investors are wary of the mining equipment sector as the commodity price rout shows no sign of reduction. 

Anglo American, one of the key global mining equipment manufacturers, has revealed a deeper restructuring programme and suspended dividend payouts as latest Chinese trade data showed fall in the imports for a second consecutive month. Anglo American has been hit by lesser imports in China and the company’s shares have dropped to all-time low. The company is now focussing on three main businesses: industrial metals, bulk commodities, and its De Beers diamonds business. 

Anglo American has announced that it will retain the most profitable businesses that deliver cash flow even when the market is down. Offloading other assets of the company would reduce its portfolio by 60%. The mining equipment manufacturer will announce further details in portfolio changes in February. The company has already planned to close De Beer Snap Lake diamond mine, located in Northwest Territories of Canada as well as the Thabazimbi iron ore mine in South Africa. 

Analysts have stated that pace of decline in imports can be attributed to the measures taken by the Chinese government after the stock market crash. Among the commodity market investors, there are fewer chances of change in sentiment.