A recent PricewaterhouseCoopers study (see related article on p. 4) reports the first half of 2011 established an all-time half-year record for mineral-producer mergers and acquisitions, involving almost 1,400 deals representing $71 billion in value. The industry’s equipment and service suppliers seem determined to match the pace—if not the volume and dollar value—of their customers’ M&A activity, if recent announcements are any indication. In addition to our report on the recently finalized $8.8-billion Caterpillar/Bucyrus deal (see p. 98), here’s a rundown of some other significant supplier-sector transactions:
FLSmidth announced in mid-September it had signed an agreement to acquire the assets of Canada-based Knelson, a privately owned company that develops, manufactures, and installs gravity separation equipment for precious metals, base metals and industrial minerals recovery.
The purchase includes Knelson’s polyurethane company, Progressive Urethane Manufacturers Inc., which will complement FLSmidth’s wear parts supply chain; and Knelson’s fine grinding product business, Knelson Milling Solutions.
The company, in business since 1978, today employs around 140 people and claims more than 3,000 installations in more than 70 countries.
Earlier, FLSmidth MAAG Gear signed an agreement to acquire all assets of the Italian company Darimec S.r.L., with the intent of expanding its product range for the minerals and cement industry. Darimec, with production facilities in Milan, is a specialized gear manufacturer which develops and produces girth gears, pinions and custom-made reducers.
These products, according to FLSmidth’s press statement, complement the MAAG range and will enable the company to offer drive systems from a single source in line with its “One Source” corporate strategy. Prior to this, FLSmidth MAAG Gear produced heavy-duty gear units and individual gear components. Darimec claims to have sold more than 1,100 girth gears worldwide, and its product range encompasses kiln girth gears up to 10-m in diameter, mill girth gears up to 11.2-m-diameter and custom reducers handling up to 10,000 kW.
The acquisition will widen the range of spare parts offered by FLSmidth MAAG Gear and increase its production capacity. In October 2011, Darimec will open an additional 1,200-m2 production hall, and service capabilities will be expanded to include installation, inspection or overhaul on all mill drives.
Darimec was established in 1961 by Italian entrepreneur Mario Dagnoni under the name Dagnoni Riduttori Meccanici, from which the present name Darimec derives. As of January 1, 2012, the company will be renamed FLSmidth MAAG Gear S.p.A.
Caterpillar acquired 100% interest in the Pyroban Group Ltd., a provider of hazardous-area safety solutions to the mining, oil and gas, industrial material handling and marine markets. Head-quartered in Shoreham, U.K., Pyroban has additional locations in Europe, Singapore and China.
The purchase enables Caterpillar to offer customers an enhanced range of Cat brand integrated power solutions and expand its presence in the global hazardous-area protection industry. Pyroban is a provider of specific explosion-protection safety solutions, including engineered kits and components, designed to modify engines, engine systems and mining equipment to meet safety certifications. In the current marketplace, Cat engines are often modified and packaged with Pyroban solutions to operate in hazardous areas.
According to Cat, its global dealer network will offer these products and service support to customers worldwide. Notably, some of these products will be available in the Americas for the first time.
In addition to the Cat branded products, Pyroban Group Ltd. will continue to offer products and services under its existing brands in Europe and Asia.
In mid-July, ContiTech announced its conveyor belt business unit, ContiTech Conveyor Belt Group, will take over Australian company M.I.R.S. (Mining Industrial Resource Supplies), Perth, for an undisclosed purchase price.
“This acquisition strengthens the activities of the Conveyor Belt Group in the Australian conveyor belt market in the long term,” said Hans-Jürgen Duensing, head of the ContiTech Conveyor Belt Group business unit. “The location ideally boosts our presence even further in the South Pacific region in particular.” M.I.R.S. has supported ContiTech in the sales of conveyor belts as an agent and dealer.
ContiTech said it plans to invest further in the region in order to expand its business with the mining industry in the long term.
Normet Group conducted two transactions aimed at expanding its regional and industrial-sector market presence. In early September, the Finnish underground equipment supplier purchased the mining and tunneling equipment and service assets of Swedish company Essverk Berg AB, based in Ludvika, Sweden.
“The acquisition of Essverk gives Normet a physical presence in Sweden and allows us to better serve our customers in Sweden and Norway,” said Aaro Cantell, chairman of Normet Group. “Essverk will be the base for our operations in Sweden and Norway and we have a very strong commitment to develop and grow the combined business, under the new name of Normet Scandinavia AB.”
“From a technology point of view, Essverk complements the Normet product range with its expertise in truck-based and lifting equipment and also provides extra manufacturing capacity. The company will also be the development and competence center for truck-based equipment,” Normet Group President Tom Melby said.
Tryggve Sjöberg, Essverk’s previous owner, has been appointed head of sales and service for Normet Scandinavia AB.
Normet also signed an agreement with QME Ltd., a mining equipment company based in Ireland, to cooperatively develop service activities. QME will become an authorized service provider for Normet, as well as a partner in product and process offering development.
“This partnership is in line with Normet’s strategy for being a comprehensive solution and service provide to its mining and tunneling customers,” said Melbye. “QME has a long history in underground construction operations and comprehensive practical knowledge in various mining processes.”
Normet said practical examples of the cooperative agreement will be joint operative process-specialist and ramp-up teams for various underground development projects.
Chilean water engineering consultancy IRH was recently acquired by Sinclair Knight Merz (SKM) in a transaction intended to offer new and enhanced water and environmental services for South American companies.
Sinclair Knight Merz Chief Executive Paul Dougas said the acquisition of IRH is a direct response to the needs of clients in South America, especially in the mining sector. IRH specializes in the implementation and management of projects related to water supply, water networks, urbanization, stormwater systems, water and sewage treatment, environmental management and hydraulics.
“The merger with IRH is our most significant move in Chile since our 2005 merger with Minmetal, one of Chile’s largest engineering and construction management firms at that time,” Dougas said.
IRH’s client base across both the private and public sectors in Chile includes Codelco, Aguas Andinas, Essan, the Government of Chile Public Works Department, a range of large commercial and retail clients, and Chile’s largest petrol retailer, Copec.
In late August, IK Investment Partners reached an agreement to sell Belgium-based Magotteaux to Sigdo Koppers, a large Chilean mining supply and construction group, for €550 million. Magotteaux is a global provider of wear-resistant consumables to the mining industry and other markets.
Sigdo Koppers reportedly plans to maintain Magotteaux as a stand-alone business, leveraging its market position to pursue industry consolidation opportunities.
IK said it had conducted a major investment program in Magotteaux’s core Belgian and overseas businesses over the last four years, spending more than €120 million on maintenance projects and on capex—the latter to support expansion into emerging markets such as Thailand and India. This resulted in the introduction of several new products, a 15% increase in headcount, a one-third increase in sales to €500 million and a two-thirds increase in EBITDA to €66 million in 2011, according to IK, a European private equity firm.