Market analysis of the world’s largest underground mines has confirmed the dominant position of Sandvik, Atlas Copco and Caterpillar in mobile equipment

Around 1,000 million metric tons (mt) of ore were extracted from underground hard rock mines in 2011. While non-mechanized methods are still employed to a large extent, mobile mining equipment is the mainstay for the majority of the largest underground operations.

                                A new report by Sweden’s Raw Materials Group (RMG) and The Parker Bay Co. of the U.S., titled Market Analysis: Underground-Mining Mobile Equipment, examines this sector of the equipment market. The report, which follows a two-year study, concludes that Atlas Copco and Sandvik are the clear market leaders, each with over a one-third share of the sector. Caterpillar has a significant share of the LHD and truck markets, making it the most viable competitor to the two leaders, with the other equipment suppliers being mostly regional and niche players.

                                RMG’s Olof Löf told E&MJ that wheel loaders comprise the largest single product group (with almost 12,000 units in operation), followed by mining trucks (with an estimated 7,500 units) and development drills (around 7,200 units). Both production drills and bolters have far smaller installed bases (roughly 2,000 units each).

                                Parker Bay’s Matthew Gilewicz confirmed that Sandvik is the leader “by a narrow margin” in underground loading and haulage equipment, while trailing Atlas Copco in development drill rigs. The two are, he said, “on somewhat equal footing for both production drills and bolters.”

                                The report is based on a jointly developed Underground Mining Equipment Database (UGDb) that covers over 950 of the world’s largest underground hard rock mines. The machine data in the report comes from approximately 40% of the mines in the UGDb (and these operations account for over half of global ore production), and this information has been used to predict the global installed base for each product line.

                                According to Löf, the UGDb identifies approximately one-third of the total population of more than 30,000 underground trucks, LHDs, drills and bolters. There is a variation in this coverage by product line that ranges from an estimated 19% to 38%.

                                Lӧf cautioned that, “while the nearly 10,000 identified machines is a notable subset of data from which to draw conclusions about the population as a whole, it may not be statistically representative due to greater availability of sources of data for certain manufacturers, regions, models, etc.”

Going Deeper
Apart from the demand for, and price of, metals, the volume of ore produced in underground operations (and its mined depth) drives the market for mobile equipment. Also, declining ore grades mean that the need to transport material out of these underground mines is increasing at a faster rate than the demand for the metal itself.

                                It is often claimed that underground mining production is likely to increase at a faster rate than total output because of the greater difficulty in securing approval for surface extraction. That has not, however, been the situation in recent years, and RMG believes the advantages of large open-pit mines will continue to outweigh the higher costs associated with underground mining. Instead of a trend toward underground extraction, we are seeing deeper, larger pits.

                                The total effect is that there has not been any major change in the split between underground and open-pit ore volumes during the past decade. The much-publicized switch to underground mining by Rio Tinto, for example, is a reflection of the very high open-pit ratio for that specific company rather than a general, global trend.

                                Technical developments have so far focused on mineral processes that can be used on lower grade ores and on larger pieces of equipment, rather than novel methods. Taken together, these changes led to a growth in open-pit mining during the late 1900s.

                                In the long term, it seems likely that the fragmented, batch production methods of traditional underground mines (drilling, blasting and mucking) could be replaced by continuous methods, and by processes such as hydrometallurgy and leaching. This would lead to a completely new underground mining industry—but not within the next decade.

Product Analysis
In the report, RMG and Parker Bay examined five sets of mobile equipment:

  • Wheel Loaders/LHDs—Atlas Copco’s Wagner Scooptram, Caterpillar’s R-series (Elphinstone), GHH Fahrzeuge’s LF series, Sandvik’s LH/Toros and EJCs, Zanam Legmet’s LKP series, and various other manufacturers (including MTI, AARD, Fadroma, Paus, Schopf and Aramine).
  • Mining Trucks—Atlas Copco’s Wagner MT series and Kiruna (GIA), Caterpillar’s AD/AE series (Elphinstone), GHH Fahrzeuge’s MK-series, Sandvik’s TH/EJC/Toro 40-50, Volvo’s A25-40 series and the FM 440, Zanam Legmet’s CB4 PCK and P24K, plus units from DUX, Bell, Maclean, Get-man and MOAZ.
  • Development Drills—Atlas Copco’s Boomer jumbos, Mine Master’s Face Master series, Sandvik’s DD-series (Axera/Quasar) and H-series jumbos, and units from MTI, AARD, RDH, Rham, Zanam and Oldenburg.
  • Production Drills—Atlas Copco’s Simba top hammer and ITH, Sandvik’s DL (Solo, Quasar) top hammer, and units from Cubex, Boart Longyear, MTI and RDH.
  • Bolters—Atlas Copco’s Boltec series, Mine Master’s Roof Master series, Sandvik’s DS/Robolt and Cabolt series, and units from Maclean, JH Fletcher, RDH and AARD.

                                In terms of active units, load-haul-dumpers (LHDs) are the most common type of mobile mining equipment utilized in underground hard rock mines. The UGDb identifies around 38% of the 11,750 LHDs believed to be in operation worldwide.

                                There are nearly 200 different models within the 4,500 LHDs in the UGDb, ranging from just a few for some manufacturers up to Sandvik’s 70 models.

                                Extrapolating the known data to the population as a whole shows Sandvik having the greatest number of wheel loaders, with more than 4,000 units in operation, followed by Atlas Copco and Caterpillar with 3,900 and 2,400 units, respectively.

                                Based on the UGDb, these three manu-

facturers appear to account for a combined 88% of the known population of wheel loaders/LHDs. Lӧf believes, however, that this calculation overstates their combined market share, with other manufacturers, such as GHH Fahrzeuge, Zanam Legmet and MTI, probably having closer to a quarter of the market.

                                The report goes on to compare these LHD market shares by payload capacity (in five classes, see Figure 2), and examines the factors that influence choice of equipment size and manufacturer.

                                Peter Gilewicz notes that, in surface mining, haul trucks are far and away the biggest product class, with multiple trucks often paired with a single loader. In underground operations, however, many mines can’t use underground haul trucks. There are, therefore, significantly fewer trucks in underground mines than loaders.

                                The UGDb identifies almost 2,300 underground trucks (with over 100 different models), compared with the 7,500 units calculated to be in operation. Sandvik is again the market leader, with more than 600 machines in the UGDb, which suggests an installed total of nearly 2,000 units, followed by Atlas Copco and Caterpillar.

                                The report analyzes the underground truck market by size, in five classes, ranging from payloads of less than 10 mt up to Sandvik’s 80-mt TH680. The average payload, according to the database, is 35 mt. The most popular model is Sandvik’s TH550 (formerly Toro 50+), ahead of Caterpillar’s AD55.

                                The report separates drills into development and production units, with these two types accounting for around 90% of the drills identified by the UGDb (the remainder comprise mainly exploration and raise-boring drills).

                                Development drills are by far the largest category of underground drilling equipment, with an estimated population of 7,200. The database identifies about a quarter of these operating units (the UGDb containing 65 different models), with Atlas Copco and Sandvik controlling the lion’s share of the market.

                                There are an estimated 1,900 production drills in operation underground (both top hammer and in-the-hole), and the database identifies over one-third of these units. Atlas Copco and Sandvik account for a commanding 47% and 42%, respectively, of this market.

                                Compared with the other product categories, the RMG/Parker Bay database contains far less information on the use of bolting rigs in underground mining. The market for bolters, however, is assumed to be around the same total size as for production drills. The UGDb identifies 346 bolting units (comprising 35 different models), which represents an estimated 19% of the total market. According to the known data, Sandvik has slightly more bolters in operation than Atlas Copco, with 40% and 37% of the market, respectively.

Detailed Analysis
The report also analyses the mobile underground mining equipment market by region and by commodity.

                                In terms of the regional analysis, the report notes that Asia has the largest mineral production from underground operations, with China far and away the biggest source. Underground mining also plays an important part in South African output, accounting for more than half of the country’s mineral production. The reverse is true in the U.S., Peru and Brazil, where most production comes from open-pit mines.

                                Although clearly leading in underground mineral production, Asia has the smallest mobile equipment population in the UGDb—accounting for more than one quarter of the global underground ore production but less than 10% of the surveyed mobile underground-mining equipment. The report notes that, to some extent, this is the result of a large number of non-mechanized mines in the region (with the opposite being the case in developed markets like the U.S. and Australia).

                                It is possible, however, that the UGDb accounts for a lower percentage of the equipment population in Asia than in other regions. In Oceania and North America, for example, the UGDb includes equipment details for around two-thirds of the underground mines. In contrast, the UGDb has details from less than 20% of the mines in Asia. Many of these undocumented mines are likely using equipment from indigenous suppliers, for whom the UGDb has few details.

To inquire about purchasing the 45-page Underground-Mining Mobile Equipment Report, and its supporting data, please contact Natalia Tyblewska at +44 (0)20 7780 7470, or [email protected].

                                The report, in PDF format, is priced at $4,900, and a supporting Excel spreadsheet (containing the mine information and mobile-equipment data) is available separately for $4,900. Details upon request.

                                Extracts from the report are available during MINExpo International at E&MJ’s booth (1665) IntierraRMG’s booth (1478) and Parker Bay’s booth (23187).

Capital Expenditure: Then and Now
The financial crisis hit the industry hard but the recovery has been faster than most experts had anticipated. RMG forecasts that total investment into the industry will increase over the next few years, and will surpass the record set in 2008, and will continue at a high level (See Figure 1).

                Looking further ahead, RMG expects an eventual slowdown in capital expenditure as new mines come online and metals prices fall. Nevertheless, RMG does not anticipate a return to the depressed levels of the early 1990s because the cost to find, develop and operate new mines is increasing. Higher capital is therefore needed to meet the increasing metals demand globally.

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