Capital Equipment News

In a vote of confidence in the local mining sector and the South African economy at large, Sandvik – despite the current headwinds – has made a substantial investment in a manufacturing facility for the local production of its underground load and haul equipment at its Jet Park, South African base, writes Munesu Shoko.

Establishing local production capabilitiesThat the South African mining sector is still not out of the woods yet, despite improving commodity prices, is undebatable. According to Statistics South Africa, the mining sector’s performance during the first quarter of 2017 was slightly better than the first quarter of 2016, contributing 12,8% to the GDP, buoyed by rebounding commodity prices.

However, the Chamber of Mines is concerned that policy and regulatory uncertainty have frozen new investment into the sector, noting that real mining GDP in 2016 (R226 billion) is smaller than what it was in 1994 (R242 billion). The industry made an accumulated loss of over R30 billion in 2015 and 65% of the South African platinum mining fraternity was loss-making this year.

Despite the worrying statistics, Sandvik has demonstrated its confidence in the long term future of the mining sector in southern Africa with a R15 million investment into a new production facility at its Jet Park, South Africa base. Officially inaugurated on September 5, 2017, the new 1 500 m2 facility will initially be dedicated to local production of the Sandvik LH115L 5-tonne underground low profile loader.

Björn Rosengren, President and CEO of Sandvik, says the investment is a vote of confidence in South Africa and neighbouring SADC countries. This is considering that Sandvik’s Mining and Rock Technology business, one of its three business divisions, generates15% of its global business in South Africa alone.

Supporting local industry

Rosengren notes that Sandvik Mining and Rock Technology has been operating in South Africa for 70 years, and during the seven-decade presence, the company has become well-acquainted with the challenges facing the mining industry and understands the important modernising role that private investment and local manufacturing can play in extending mine life, skills development and employment, as well as the achievement of sustainable, inclusive growth.

“We have identified the opportunity to support local industry through local manufacture of Sandvik products and localisation of machines, supporting both employment and local suppliers in the process,” says Rosengren, adding that this highlights Sandvik’s commitment to meaningful contribution towards the growth of the South African economy.

Speaking of local suppliers, Mats Eriksson, President for Product Area Load and Haul at Sandvik Mining and Rock Technology, says remarkably the facility has already achieved approximately 70% local content within a very short period. “The design process only started about a year ago, and about 70% of the parts used in the manufacturing processes are already sourced locally, which is quite phenomenal,” says Eriksson.

Ramping up production

The facility began prototype operations in July this year and will initially produce the LH115L LHD. “Facility operations will follow a staged approach, with capacity ramping up based on customer demand,” says Steve Greisiger, Production Manager Jet Park, Product Area Load and Haul.

The facility has a dedicated staff complement of 15 people at this stage, working on 10 assembly bays in the facility. Under the Sandvik model, fabrications are outsourced to external service providers, and this function has been contracted to a local company.

“We only import some special components such as drivetrains and engines,” says Simon Andrews, Vice President, Sales Area Southern Africa, Sandvik Mining and Rock Technology.

“The latest investment represents an exciting new chapter in the company’s development and underscores our desire to play a part in the skills development and local manufacturing capabilities,” adds Andrews.

Explaining Sandvik’s future plans for the new facility, Rosengren says the company will take one step at a time, and if all goes well, Sandvik is open to future expansion as demand peaks, reiterating that any expansion project will be dictated by sales volumes. “We have established a good local supplier base that will make it easy for the next product we may decide to put on the local production line in future,” he says.

Enter Sandvik LH115L

The new facility has marked its inauguration with the production of the LH115L, a new Sandvik 5-tonne low profile loader, a product that has been developed and optimised for local African mining conditions. The LH115L – which builds on the proven track record of its predecessor, the

EJC115L – is the first Sandvik product to be manufactured locally, using local suppliers, locally-sourced components and a local workforce.

“The LH115L will be manufactured only in South Africa. The design process focused on a number of local customer requirements and operating conditions. Several customers were consulted during the design stages to make sure that the product addressed critical requirements of the local market,” says Eriksson.

“The LH115L is based on our EJC115L. We have taken customer feedback and incorporated it in the design of the upgradedLH115L,” says Greisiger. While the Sandvik LH115L builds on the proven base of its predecessor, the machine benefits from several modern safety improvements to meet the stringent mining legislative requirements. For example, the machine comes with steel braided fuel lines as standard. A key advantage of steel braided hoses is that they don’t get brittle like their rubber counterparts, preventing the risks of fuel leakages and potential fires in underground applications where such accidents are out of question.

In line with the Department of Mineral Resources’ new legislation that compels the use of Proximity Detection Systems (PDSs), the new machine has an optional PDS interface, making it compatible with an array of such technologies from different suppliers.

“We have also designed the machine with uptime in mind,” says Greisiger.

“Although it benefits from latest safety features, it has simplified maintenance and service processes for our customers.” The new Sandvik LH115L is mainly targeted at narrow reef underground chrome and platinum mining applications, but Greisiger says there has also been some interest from the diamond mining fraternity as well.
Sandvik has already run a prototype machine that has completed its trial run.

Andrews says the feedback from customers has been phenomenal. “We have sold the first four units we have trialled. Four other units currently on the production floor are also going on trials on a test-to-buy basis,” adds Andrews.

Encouraging outlook

Despite a slow global mining market, Rosengren is encouraged by the rebounding commodity prices. He reiterates that the investment in a local production facility is based on the long-term outlook of the mining sector in southern Africa, which he believes is bright despite a set of challenges currently setting the industry on the back foot. He reasons that investments of this nature are informed by long-term prospects, not just short-term, quarterly based business cycles.

“Mining markets are cyclical by their very nature. They go up and down and that’s the nature of the business,” says Rosengren. He has, however, noted that some minerals have increased in value quite dramatically during the last year or so. “While some commodities have picked up significantly, the platinum side of the sector is still very much under pressure,” says Rosengren. Despite a constrained platinum sector, Andrews tells Capital Equipment News that Sandvik still sells about 40 low profile loaders for underground applications per year, which is still a good number, especially in depressed market conditions.

He reasons that, apart from a strong product that has proven itself over the years, the company’s key competitive edge is its strong service structures in South
Africa. “We understand the needs of our customers. They need accessibility to us, reduced cost per tonne and availability of their machines,” says Andrews, adding that the local production facility will significantly shorten lead times.

Contact Capital Equipment News

Title: Editor
Name: Munesu Shoko
Email: capnews@crown.co.za
Phone: +27 11 622-4770
Fax: +27 11 615-6108

Title: Advertising Manager
Name: Elmarie Stonell
Email: elmaries@crown.co.za
Phone: +27 11 622-4770
Fax: +27 11 615-6108

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