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VDMA Germany's Mining-equipment Manufacturers Achieve Another Year of Record Sales, Developing New Markets Worldwide Germany's manufacturers of mining machinery built on the massive increase they achieved in sales turnover in 2011, with another 20% rise predicted for 2012. This was the message Dr. Paul Rheinländer, president of the VDMA's mining branch, had for the press conference timed to coincide with the branch's annual meeting in Essen in late November. "We are one of the few sectors in Germany that has continued to grow despite the financial and sovereign debt crisis, with an average of about 13% growth each year since 2007," he said. Basing his comments on figures for the first nine months of the year, Dr. Rheinländer predicted that between them, the near 130-strong mining branch members will have achieved sales worth some €5.8 billion ($7.4 billion) during 2012, compared with €4.83 billion the previous year. Of this, no less than €5.33 billion will have been won in export markets, he added, accounting for 92% of total turnover. Speaking later in the day to an audience composed mainly of branch members, Dr. Rheinländer pointed out that in value terms, new orders for mining equipment have doubled since 2005. In comparison, he said, other machinery sectors have had markedly less success in terms of business recovery since the economic downturn struck during 2008-09, with current sales values standing only slightly higher than those achieved seven years ago. "While mining is certainly a cyclical business, the downturn in orders experienced in 2009 was short-lived and the situation is still clearly positive," he said. Exports are the key to ensuring that Germany's manufacturing sector continues to thrive, especially since the domestic hard coal mining industry has become a smaller market for its products. Nonetheless, in 2012 the VDMA's branch member companies expected to increase their sales into the local market by some 15%, Dr. Rheinländer told his audience, with a sales value of around €470 million compared with €410 in 2011. By way of an illustration for the potential of Germany's mining and quarrying industry, Dr. Rheinländer drew attention both to the range of minerals currently being won in the country, and to deposits that VDMA 4 are known about and could be worked under the right economic conditions. "We produce somewhere over 770 million mt of minerals a year," he said. "We have the world's largest brown coal mines. Add to that the considerable tonnages of potash and salt that we produce, and the millions of tons of building and construction raw materials, and you can see that mining is a bigger business than most people in Germany realize. "And other things make us quite optimistic about the future for the domestic market," he added. "Just as an example to show that mining in Germany can be worthwhile, the Storkwitz rare-earth deposits in Saxony contain a resource of 38,000 mt worth €1 billion. Or the Erzebirge tin deposits—these have resources of around 160,000 mt, making them one of the largest in the world. And don't forget, the copper deposits in Saxony. The Kupferschiefer there has a 200 million mt resource from which about 2 million mt of copper could be recovered. "Once Germany's last three hard coal mines have been shut, the country will be totally dependent on imports," he reminded his audience. "Some day, hard coal mining here will pay off again, but we will need to make substantial efforts to make this happen." Export Markets: The Balance Changes Looking at the specific details of VDMA branch member companies' success in exporting worldwide during 2012, Dr. Rheinländer noted that although there had been a near-halving in orders from China year-on-year, increases won in other parts of the world had more than compensated for this. "In Australia alone, revenues are expected to grow by a factor of four," he said. In percentage value terms, this meant that German companies' exports to Australia last year were almost equivalent to those achieved in China in 2011. Accounting for 15% of export sales, Australia was their most important market, a gain of five positions in the export league table in 12 months. Other major success stories have been the increase in exports to the United States and Latin America, where there has been steady growth over the past three years. Meanwhile, demand for new equipment in the sector's second most important market, Russia, has been maintained during the period. Looking specifically at the Chinese market, Dr. Rheinländer noted that a number of factors had combined to reduce demand there. The country's economy has cooled overall, he said, and growth rates have fallen, leading both public and private investors to be more cautious. Steel demand has also fallen, which has impacted coking-coal production. On top of that, there has been good progress in expanding the output of the new large coal mines in the country, and Chinese manufacturers are becoming increasingly able to produce equipment themselves for their own market. "Against this background, we hope to be able to maintain our turnover in the future," he said. Dr. Rheinländer went on to say that there are other factors that may influence demand in some of the major markets. These include the imposition of new mining taxes in Australia and the rapid devel- VDMA MINING SUPPLEMENT • 2013