Mining Suppliers Feel Urge To Merge
Mining mega-mergers, such as Newmont-Goldcorp and Barrick-Randgold, are spurring similar business combinations in the supplier space, said Pekka Vauramo, President and CEO of the newly-formed Metso Outotec.
On July 4 Metso and Outotec announced that they were combining. In 2018, the two companies had combined sales of $4.74 billion (€4.2 billion), which would rank the newly-combined company as number two in the process technology sector, just behind Sandvik.
Vauramo spoke to Kitco mid-month about M&A in the mining sector.
"When customers consolidate we have to look at similar actions. Bigger customers look at suppliers who are relevant to them," said Vauramo.
Vauramo, who left Finnair about a year ago to head Metso, said the two mining businesses are complementary.
"If you look at the mineral processing business altogether, Metso is known as being very strong in the comminution, the front end. Outotec's strengths are in the backend starting from beneficiation all the way to metals refining," said Vauramo.
"Customers appreciate someone who can be strong throughout the chain, who can innovate and take a very holistic view of the entire chain."
Vauramo likes the current gold price. This summer gold appeared to have made a decisive move above the $1,400/oz mark.
"If this lasts, we expect several gold projects to come on stream," said Vauramo.
He describes base metals as mostly "wait and see" with the exceptions of copper and battery materials, which are "active".
Regarding the move to digitization, Vauramo said the action mostly seems to be on the mobile equipment side with miners moving towards automation and electrification.
Metso Outotec feels the impact from digitization on its interface with driverless trucks. Vauramo said it is crucial for Metso Outotec's feeders and crushers to know the amount and type of rock being dumped for processing now that humans are being pulled out trucks.
A major stumbling block to get miners to adopt more digitization is fragmentation, said Vauramo. Suppliers each have their own systems.Creative Commons image of open pit courtesy of Craig Dietrich. Thumbnail of Pekka Vauramo courtesy of Metso.