New projects will up the demand for larger mining equipment.

Samir Bansal,
General Manager,
India Off-Highway Research.

In the long term, the coal, steel and cement sectors should see positive trends, which supports growth in mining activity and equipment demand.

How the current FDI inflow in the mining sector has impacted the demand prospects of mining equipment and machinery from Off-Highway Research point of view?
Mining is one of the core sectors that not only contributes to GDP, but also acts as a catalyst for the growth of other industries such as power, steel and cement. India’s mining industry faces a tough task ahead amid weak global markets, even as the government plans to fast track auctions and check illegal mining with satellite based surveillance. Despite endowment with huge resources of many metallic and non-metallic minerals, the mining industry has remained relatively small and stagnant.

India is a major producer of minerals and ores, and important among them are mica, coal, barite, bauxite, iron ore, zinc, manganese and aluminium. However, coal sector is the main driver for growth in demand for mining equipment. Production of coal and lignite has increased significantly in the last decade from 462.1 million tonnes in year ended March 2007 to 683 million tonnes in 2016 and a target of was 724.7 million tonnes in 2017 and one billion tonnes by 2019.

Further, the mining sector is closely linked to infrastructure development, which in turn has a major influence on the overall economy and prosperity of the country. Therefore in the long term, the coal, steel and cement sectors should see positive trends, which supports growth in mining activity and equipment demand.

Have there been any expansion plans from PSU’s and private players that have given a demand boost for the mining equipment demand?
There has been a tepid demand for the fuel from thermal power plants lately, and coal stocks at mines and power plants have risen. The key problem is that power plants are currently operating at around 55 per cent of their installed capacity. However, distribution companies are unable to buy power despite a huge supply-demand deficit due to huge accumulated debt and state governments are struggling to resolve this problem. In view of the above, coal production targets are being scaled down and new projects are being delayed leading to a decline in demand for mining equipment.

Please elaborate on the trends in import of mining equipment?
Import of mining equipment has been declining as most manufacturers are expanding their locally manufactured product range. However, new projects are being planned with use of larger mining equipment in view of better efficiencies. These large equipment are still not produced in the country due to small demand and have to be imported. Demand for these large imported equipment is currently low due to delay in project execution.

Could you brief us the shift towards the latest and more advanced heavy earth moving equipment of large capacity for opencast mining?
In view of better operating efficiency and safety, almost all new projects are being planned with use of larger mining equipment such as 190-240 tonne dump trucks as against 100 tonne dump trucks being used earlier. However, demand for these large mining equipment is currently low due to delays in project execution, but would increase in the long term with infrastructure and economic growth.

What are the challenges of the mining sector and what are your suggestions for the healthy growth?
Resolution of the debt problem of power distribution companies is a major challenge that is adversely affection growth of the mining sector. Further, management of social impact of the new projects along with compensation and rehabilitation of displaced people plays an important role in the healthy growth of the mining industry.

What is the overall size and value of the mining equipment in India?
It is very difficult to segregate equipment for exclusive usage in mining. However, major equipment used for mining applications in the country are dump trucks and large excavators, crawler dozers, mobile compressors and wheeled loaders.

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