Shifting gear: mining OEMs reset for a different future

American baseball hall-of-famer and sometime philosopher Yogi Bera said, “the future ain’t what it used to be” and that’s more apt than ever for the companies that sold more than US$66 billion of primary mining machines, parts and services last year.

The world’s top 20 mining original equipment manufacturers (OEMs) are framing a new vision of the future for the business without being able to include all the colour they might like to.

The outlook for critical energy coal and steel-making material markets beyond the end of this decade is unclear. Ditto for their potential replacements, even everyone’s favourite metal, copper.

The geopolitical landscape is shifting ceaselessly now it seems. Major mining OEMs are reporting strong order books, sales and tendering activity but Metso CEO Sami Takaluoma is not alone with his observation this month that, “tariff-related turbulence could potentially affect the global economic growth and then also affect the market activity”. Replace tariff with trade decoupling or one of the other terms for deglobalisation and that describes a world most of Takaluoma’s peers wouldn’t have envisaged when they started in their current leadership roles.

Uncertainty exists, too, around technology acquisitions that have absorbed a bucket of mining OEM money over the past five or so as the sector bets on the emergence of a material “smart mining” tech market in the 2030s. At the moment the 50 largest mining and metals tech businesses, including OEM divisions, sell $6 billion of software, sensors, communications and remote control systems to miners versus the $66 billion sales of the top 20 OEMs.

Significant returns on massive investments in battery-electric machine development also remain some way off.

Komatsu Mining technical director Michael Lewis called it the biggest market reset in the industry’s history. He said two years ago in Perth, Western Australia, Tier 4 diesel-engine standards for off-highway vehicles were an epochal development for mining OEMs but the energy transition was “an order of magnitude larger than what we thought was the biggest development activity that we ever had and would ever probably see”.

“There’s about 10,000 ultra-class [mining] trucks in operation right now worldwide. This represents probably about … 10 years of manufacturing capability if you’re going to replace them brand new. Obviously this is something that’s not going to happen overnight,” he said.

Big battery-electric machine orders over the past 12 months have put wind in the sails of some of the world’s major mining OEMs, such as Epiroc, Sandvik and Liebherr. Their Chinese counterparts are, by all accounts, already delivering large fleets of autonomous BE trucks and other gear. “There are obviously other OEMs that are making great strides [and] so far the Eastern part of the world is showing us the way. If you go to most mines inside China you won’t find just diesel fleet. They’re already on the journey,” Shane Clark, then energy transition group manager at the world’s largest mining contractor, Thiess, said in May last year.

Epiroc CEO Helena Hedblom said in January this year at the Future Minerals Forum in Riyadh, Saudi Arabia, the industry’s transition from diesel-powered equipment to battery-electric and hybrid was moving more slowly than she’d like. BEV sales accounted for maybe 4% of Epiroc’s circa-$6 billion annual revenues. Hedblom would be more pleased after a record surface drill sale to Fortescue in Australia, announced this month.

But with much fleet replacement activity now occurring 10-15 years after new equipment sales hit record levels for many OEMs between 2010 and 2012, the speed of any diesel-to-BEV transition remains uncertain. That is partly due to equipment availability with Epiroc, for example, less than halfway to its 2030 goal to have BEV versions of its fill mining equipment range ready for delivery.

Commodity view uncertain

Mining’s always been a volatile market for its leading suppliers.

When Caterpillar outlaid $8.6 billion for Bucyrus in 2010 and Komatsu followed six years later with a $2.9 billion takeover of Joy Global, energy coal was a big part of their buyout rationale. Would they make the same plays today? Maybe Caterpillar would look for a better deal.

The International Energy Agency is speculating that global thermal coal demand could “plateau” around 2027, but who really knows? What is known is that production in the three major producing countries, China, India and Indonesia, reached new records in 2024 and output is still growing. World coal output topped nine billion tonnes for the first time last year. “Overall, we expect annual global coal production of close to 9Bt through 2027,” the IEA says.

Coal and iron ore remain major generators of annual sales for mining’s traditional heavyweight OEMs, and fast-growing Chinese companies that now make up a quarter (five) of the world’s top 20 mining mobile equipment OEMs. McKinsey said last September thermal coal, met coal and iron ore accounted for up to 70% of an estimated $4 trillion of annual global mining and metals revenues, “with production volumes more than 30 times higher than all other materials combined”.

Gold, copper and aluminium made up a further 15-20% of mining and metals revenues. Gold and copper sector business makes up a disproportionately high level of sales and orders for mining OEMs outside of China, Belarus and Poland.

“Gold obviously is at record high [levels] but copper is also at very healthy prices. We see customers in both of these commodities going at full speed to take maximum advantage of the current prices,” Sandvik CEO Stefan Widing said this month.

Much of the equipment, parts and services flowing into the gold space is going to brownfield projects and the same can be said for copper, which presents mining equipment suppliers with strong structural growth upside if greenfield projects can start moving forward faster. However, elevated geopolitical risks are making major decisions about capital investment in long-term projects more and more difficult and complex. The rising capital intensity of new copper projects is adding to the weight on those decisions.

Veteran mining leader Mark Cutifani said in Adelaide this month the industry was mining eight-times more material than it was 100 years ago to create a tonne of copper. “Grades have gone from 4% to 0.5%. We mine 24 times the amount of waste tonnes to produce that same of same amount of copper. We use 16 times the amount of energy and we use twice the amount of water. That’s on average across the industry. That’s what … we've got to swim against.”

The conference Cutifani was speaking at heard that only two of the world’s 40 largest undeveloped copper deposits – containing an estimated 528 million tonnes of the red metal – had made it into production. A number of the deposits were discovered decades ago. Many faced intractable permitting delays.

“Start dates for more than 20 of these projects have shown a consistent pattern of delay since 2014, and all have been delayed in forecasts made from 2020 onwards. In 2014, the majority of these projects were forecast to be in operation by now,” BHP metals analysis lead principal, Sam Farrell, and head of copper and potash strategy, Laura Whitton, wrote last September. On the demand side, they believe “energy transition” and digital copper consumption will expand total annual copper use by about 70% to more than 50 million tonnes a year by 2050.

Back on the supply side, apart from the new project approval logjam, Farrell and Whitton cited the issue of declining grades (increasing economic production pressure) at existing mines: “We estimate the average grade of copper mines has declined by around 40% since 1991. Without technological advancements grade decline is likely to further increase production costs on a unit of output basis.

“We see examples of incremental productivity improvements from AI-enabled insights in processing, the repurposing or reinvigorating of older facilities with latent capacity, and adoption of new technologies to improve leaching. But it will be difficult to see the impact of these technologies becoming widespread until at least the mid-2030s.”

Technology is a key moving part in the future picture global mining OEMs are painting.

If you can’t beat ’em join ’em

Many have highlighted the fractional value of mining’s 20 majors compared to the world’s trillion-dollar technology giants such as Apple, Microsoft, Amazon, Alphabet and Meta (which rely on the miners to build iPhones, tablets and data centres, among other things).

The top 20 mining equipment OEMs include 17 public-listed companies worth about $490 billion.

Mining’s major suppliers have been aggressive buyers of smaller mining and metals technology firms in a c$7.5 billion transfer of tech into the hands of OEMs and other suitors over the past 15 years. Leading advisors such as Australia’s Atrico see more sector mega-deals going down in the wake of this year’s Weir Group $800 million buyout of software firm Micromine and Wabtec’s $1.78 billion acquisition of Evident Scientific Inspection Technologies.

Large mining suppliers, including OEMs, are recasting themselves as “technology companies”. Case in point, Weir – “our technologies are the beating heart of critical processes in mines across the globe” – which says Micromine adds a “complementary addressable market of £2 billion [US$2.7 billion]” that is “inelastic to [the] mining capex cycle”.

All of mining’s major equipment manufacturers have expanded aftermarket – service and parts – businesses so that they overshadow new and replacement equipment sales, many significantly, over the past 20 years. While some are keeping technology embedded in aftermarket divisions, companies with large and growing digital and automation businesses are starting to isolate them in their reporting. Komatsu this month launched a new Mining Digital Solutions arm. The trend will grow as technology sales climb and sustainability and circularity become more than just mantra for miners and their suppliers.

Territory trump tariffs?

As well as aftermarket and digital dilation mining’s major equipment suppliers have massively grown their global footprints over the past 25 years on the back of M&A and investment in regional production, distribution and support. Most have been able to take withdrawal from the Russian market in their stride since 2022 and while none would have foreseen the broader market balkanisation of the past few years and certainly not the chaos of the past few months, they have arguably never been better positioned to deal with it.

Hedblom said this week Epiroc was still quantifying the potential impact of a new wave of US tariffs, “but of course there is an impact”.

“We are busy with mitigating actions, redirecting routes of our distribution; for example, from Europe, not going through the US and then from Canada or Mexico or South America we are going direct instead. We are also leveraging our global footprint when it comes to manufacturing because we have dual capabilities for many products. So that is something that we can very quickly now put in place.

“We are using the existing footprint in a smarter way given the tariffs.

“It’s a changing environment but the organisation is fast-paced when it comes to making very tactical decisions in situations like this.”

Sandvik’s Widing saw the company’s metal cutting tools business as a microcosm of its anti-tariff response.

“We are now the only Western manufacturer with local manufacturing capability for [carbide] inserts in China. So there’s going to be puts and takes here for sure, which also means opportunities in some regions. If you look at the US most of competition are in a situation where they are importing basically everything. We are one of the few with local manufacturing capabilities. If we have to we will simply increase production capacity in the US. It's not a big thing for us.

“So if the competitive dynamics forces us to increase capacity in the US we will do that. That's our plan.

“[But] I don’t think there’s going to be any winners if there’s a global trade war.”

Metso’s CEO said: “In April we have seen volatility especially regarding tariffs. We believe that our extensive global presence and supply chain will help us navigate these challenges and their direct impacts are likely to be manageable.

“A more significant issue is the potential impact of tariffs and counter-tariffs on global economic growth and, consequently, on the demand from our customer industries. So far the underlying demand has been stable but we are monitoring the situation and preparing to respond quickly to any changes,” Takaluoma said.

He said the US accounted for about 15% of Metso’s mining and aggregates orders in 2024.

That business looked stable in the face of US federal government efforts to speed development of new mines while it added to headwinds for capital plant and equipment suppliers.

“We don't see any material change in the share of business … linked to the US,” Takaluoma said.

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