The Sandvik Mining and Rock Technology business area offers equipment, tools, service and technical solutions for the mining and construction industries. Customers are located around the world and work with applications such as rock drilling, rock cutting, crushing and screening, loading and hauling, tunneling, quarrying and breaking and demolition.
About 74 percent of Sandvik Mining and Rock Technology’s customers are in mining, 23 percent work in the construction industry and the remaining 3 percent are oil and gas customers.
Capital expenditures among Sandvik Mining and Rock Technology’s customers rose in 2017, prompted by a rise in commodity prices. The upward trend was driven mainly by a rise in gold prices, following by higher prices for copper as well as zinc and nickel. Investments in new equipment picked up, especially in the first six months of the year, following a previous lag in spending. Infrastructure investments, which drive our business in the construction area, were stable during the year and showed encouraging signs of growth in Asia, and particularly in China due to stimulus programs. India continued to invest steadily in necessary infrastructure, while the situation in the Middle East was a bit more subdued during the year.
Being no 1 or 2
Our mining business performed very favorably in 2017, mainly driven by increased investments in new equipment. To meet the demand, we ramped up capacity by more than 100 percent in some product areas. Nonetheless, some of our plants faced challenges meeting the sudden increase in demand.
Focus on core
During the year, we continued to focus on the aftermarket and increased our share of parts and services on our installed base of equipment. We also expanded our service offering within the aftermarket, which is an area that remains profitable even in tough economic times.
In line with our strategy to focus on core capabilities, we divested the product area Mining Systems in 2017. The Mining Systems conveyor components business, including the specialist conveyor systems business in Hollola, Finland was divested to NEPEAN. The Mining Systems project business was divested to FLSmidth, with the exception of the project business assets in South Africa, which are awaiting merger control clearance. This is expected to take place in the first quarter of 2018.
We continued to invest in developing products that make our customers’ workplaces healthier and safer, for example by reducing the use of diesel through the electrification of our equipment. We are also using low-emission engines in our truck fleets. This is helping to eliminate harmful exhaust fumes especially in the confined spaces where many of our customers work.
Within our operations, Sandvik Mining and Rock Technology focus on using materials and resources efficiently and on reducing emissions. Selecting lighter packaging for spare parts and recycling consumables such as drill bits through customer recycling programs, are a couple of examples of our activities.
We carefully select and audit suppliers to ensure they meet the requirements outlined in our Code of Conduct and there is zero tolerance for suppliers who do not live up to our standards.