General Electric Co. ’s new mining unit plans to offer products and services that improve efficiency even as industry-spending cuts crimp suppliers such as Caterpillar Inc.
“We think the cycle timing is actually good,” Geoff Knox, GE Mining’s chief executive officer, said yesterday at the MINExpo industry exhibition in Las Vegas. “We’re not here to sell big pieces of gear, we’re here with smart solutions that help them operate smarter in slightly tougher times.”
GE plans to accelerate growth at the unit through acquisitions and by boosting sales of products it already makes to miners. The Fairfield, Connecticut-based company is expanding its presence after Caterpillar trimmed its 2015 forecast and Australia’s BHP Billiton Ltd., the biggest mining company, last month delayed an estimated $68 billion of projects.
Global-mining capital expenditures are poised to decline 14 percent through 2014 from a peak of $136 billion this year, JPMorgan Chase & Co. said in a Sept. 21 report.
At MINExpo, GE unveiled a new electrical-drive system for underground mining vehicles such as those manufactured by Fairchild International Inc., which it purchased in May, as well as software to help monitor and optimize mine operations.
The company also makes drive systems for massive above-ground mining vehicles manufactured by companies including Komatsu Ltd. It sells software that helps airlines and railroads keep tabs on the performance of their equipment and anticipate maintenance needs.
Sales at the mining unit may grow to $5 billion “within a few years,” Lorenzo Simonelli, CEO of GE Transportation, of which the division is a part, said in an interview last week. That compares with about $2 billion generated last year by GE’s current offerings.
GE Mining will be based in Brisbane, Australia, home to Industrea Ltd., which GE agreed to buy in May for $466 million.
Caterpillar, the world’s largest maker of construction and mining equipment, cut its 2015 profit forecast to $12 to $18 a share, compared with previous projections of $15 to $20 and expects moderate and “anemic” growth through that year, Chairman and CEO Doug Oberhelman said this week in a presentation to analysts at MINExpo.
Australian iron-ore producer Fortescue Metals Group Ltd. on Sept. 4 cut its full-year spending forecast by 26 percent to $4.6 billion.
“There’s obviously going to be short-term volatility,” Simonelli said at MINExpo. “When you look at the long-term trends, however, this is obviously an industry that’s going to be there.”