Innovative products boost productivity and profitability
Sandvik Mining and Construction offers the market’s most advanced and complete product program for the mining and construction industries. Through close cooperation with customers, continuous improvements are made to meet required adaptations of products and total solutions.
The business area meets customer needs in all mining operations, on the surface and underground – from an early stage in the process, through exploration knowledge and equipment, development work of a new mine, to deliveries of equipment and services to new and existing mines. In the construction industry, Sandvik serves as a partner for customers in such niches as quarrying, tunneling, demolition and recycling and other civil engineering applications.
Sandvik Mining and Construction offers customers one of the broadest product programs in the industry, and the business area’s comprehensive service program ensures that customer’s machines deliver maximum productivity. Broad training programs also ensure that customer operators are able to handle the tools and machines safely, and in a manner that provides optimal product life and productivity.
Substantial investments are made in the aftermarket in all parts of the world. Service operations are developed to meet demands for greater availability, higher utilization and better performance. Since the business area was established ten years ago, the percentage of invoicing attributable to service, tools and spare parts has risen from 40% to about 50%, and this trend is continuing.
Effective 1 April 2009, Sandvik Mining and Construction is active in three customer segments: Underground Mining, Surface Mining and Construction.
Market’s driving forces
The mining and construction market has grown sharply in recent years, based mainly on investments in the market’s different areas of operations. The investments, in turn, are linked to demand for base and precious metals and raw material for energy. A primary driving force has been the strong expansion and increased investments both in traditional markets and emerging markets, particularly in China and India.
Another key driver lies in customer efforts to increase extraction rates and, with advanced machinery and tools, to also increase productivity, operating efficiency and profitability. Higher production rates, in turn, create a significant aftermarket for tools, spare parts and service. Service and maintenance comprise one of the business area’s highest priorities and rapid growth sectors.
Increased globalization and consolidation among customers, and greater demand for total solutions, are the catalysts for continued structural changes in the mining and construction industries, which benefits Sandvik Mining and Construction. More stringent requirements on safety, the environment, energy consumption and ergonomics also serve as significant drivers for demand within the industry and the business area’s development.
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| INVOICED SALES | OPERATING PROFIT AND OPERATING MARGIN |
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| INVOICED SALES, SEK M | 2008 | 2007 | 2006 |
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| Sandvik Mining and Construction | 38,651 | 33,073 | 25,001 |
OPERATING PROFIT AND
OPERATING MARGIN | 2008 | 2007 | 2006 |
| SEK M | % | SEK M | % | SEK M | % |
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| Sandvik Mining and Construction | 4,996 | 13 | 4,979 | 15 | 3,672 | 15 |
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Market
Sandvik Mining and Construction is a global organization, in which Australia, the US and China represent the largest geographical markets. Combined, these countries account for about 25% of sales.
The world market for the business area’s products and services to mining and construction industries has an estimated value of more than SEK 220 billion. Over the past years, total market growth worldwide has well exceeded 5% annually, based mainly on substantial investments in the mining sector as well as infrastructure projects in Asia.
Operations during the past year
Strong development was noted for Sandvik Mining and Construction’s order intake from the mining industry during the first ten months of the year, followed by a sharp decline. Metal prices remained high during the first six months of the year, but fell sharply throughout the remainder of 2008.
The construction industry was characterized by high activity during the first half of the year, mainly in Eastern Europe and Asia, while mature markets such as Western Europe and US weakened. A rapid decline followed and continued throughout the rest of the year, leading to a sharp decrease in order intake from the construction industry.
In view of the global economic slowdown, a decision was made at year-end to implement a number of measures to lower production capacity, adjust inventory levels and reduce costs, partly through personnel cutbacks.
An agreement was signed with Potash Corp of Canada to deliver mining machines for continuous mining operations. It is Sandvik’s single largest order to date in operations involving the mining of soft minerals. Success in this sector continued during the year with deliveries of four Road Header Systems to the Czech Republic and four other units to Poland. Later in the year, several project orders for materials handling systems with a combined value of about SEK 2,000 M were received from Australia, Brazil, Poland and Mauretania.
The first strategic orders for Sandvik’s new primary crushers were also booked during the year. The crushers have several unique advantages that significantly improve their operating capacity in terms of maintenance, productivity and accessibility.
In China, the business area’s position as a leading supplier of advanced mining equipment to the coal industry was strengthened considerably, and order intake doubled during the year. The new production unit opened in Santiago, Chile, is the business area’s largest plant in Latin America.
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 | SANDVIK DR 460
Sandvik’s powerful DR 460 drill rig is used for drilling large blastholes for surface mining. The machines are designed to deliver very high productivity in challenging external environments. |  |
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SANDVIK DD 530
In underground mines, Sandvik’s DD 530 drill rigs ensure efficient and safe drift mining. The rigs can be equipped with up to three drill booms and cover large areas without repositioning. The tools are optimized to meet stringent require ments. |
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Safety in challenging environments
Sandvik has service and maintenance personnel at mines operated by customers in all parts of the world. Some of the mines are situated in such remote locations that it takes several hours by air, or a full day by car, to reach the sites. In some cases, it is impossible to reach or leave the mines for long periods of time.
The availability of machines used in production is thus a critical issue for the customers. It is imperative for Sandvik Mining and Construction to ensure optimal equipment quality and reliability. The business area’s well-trained service organization is equipped to quickly solve whatever problems may arise, thereby minimizing loss of production for the customers.
The number of Sandvik employees working in service and maintenance positions at customer sites ranges from half a dozen to more than 100 persons per mine. These employees work on contracts that vary in length from six months to about 4–5 years. Extremely rigorous demands are placed on Sandvik to ensure the best possible conditions for these employees, as well as a safe working environment, reliable transportation and access to all tools required, spare parts and maintenance equipment.
Good safety leads to good business
Safety is focused first and foremost on people, but there are also sound economic incentives to focus on the environment, health and safety. In many cases, the customer will require the companies tendering for work to demonstrate a strong safety culture and well-documented safety systems. In many cases, it is also an essential prerequisite for the finalization of a business agreement.
Each time Sandvik is awarded a new service and maintenance contract, a comprehensive safety risk assessment is carried out. This is to identify potential hazards that may arise during the contract period, and enable the company to evaluate the measures that need to be implemented. The assessment helps to determine which processes and what kind of preparatory training is required, both for the customer and Sandvik’s personnel.
 Automated innovations
AutoMineTM is a Sandvik system that provides a good example of innovations that enhance safety and productivity and reduce costs for customers.
Supported by the system, operators are able to sit in air-conditioned areas above ground and operate a number of unmanned loaders and trucks that are located hundreds of meters underground.
In the mining operations of the future, operators will be situated outside the immediate production area and, at the same time, productivity will increase significantly.
Exploration drilling with Sandvik’s equipment in the mountains east of Antofagasta in northern Chile. |