The boom in commodities' prices, driven particularly by the growing demand from China for iron ore, is leading to significantly enhanced investment in the mining industry in Australia. These price increases have improved the economic viability of many mining investments and led to the proliferation of both greenfield and brownfield projects.
New analysis from Frost & Sullivan (motors.frost.com), The Australian Market for Gears and Gearboxes in the Mining Industry, finds that the market earned revenues of $170 million in 2009 and estimates this to reach $282 million in 2016.
"In the future, investment in capital equipment will remain strong, and the industry is likely to see growth averaging 8 percent annually," says Frost & Sullivan Australian Managing Director Mark Dougan. "The hike in investment in the mining sector has triggered a demand upsurge for gears and gearboxes, which are used in a variety of applications including conveyors, mills, and draglines."
The Australian market for gears and gearboxes in the mining sector is at a mature stage. Multinational gearbox suppliers dominate the landscape; they usually import the products into the country. As only a few organizations have local gear-cutting capabilities, most suppliers carry out only gearbox assembly operations in Australia.
Although the prospects for the market are bright, there are some challenges facing suppliers. Escalating material and labor costs and exchange rate fluctuations have affected pricing. The recent strength of the Australian dollar, particularly against the US dollar, has made imported gears and gearboxes more competitive in price terms against locally-manufactured products.
The impact of the proposed Mineral Resources Rent Tax (MRRT) and the infrastructure constraints on the industry is creating some uncertainty. The MRRT will restrain mining investment to some extent, at least until its details are fully worked out. This will take time, considering the current political environment in Australia. As a consequence, some mining projects will be delayed or deferred during the short term.
The geographically dispersed nature of the mining industry in Australia has thrown up logistical challenges for suppliers of equipment and service providers. Regular face-to-face interaction with customers is difficult, unless there is direct presence in or around those locations.
The entry of Chinese companies has caused issues for current suppliers as these Chinese competitors are able to produce acceptable quality products at low prices. In this scenario, service capabilities of suppliers will play a key role in customer retention. Customer responsiveness is becoming an increasingly important attribute for market success.
'With increased market competition, gear and gearbox suppliers need to focus on building and strengthening customer relationships, " says Dougan. "They must offer customized gearing solutions with greater technical design capability."
If you are interested in more information on this study, please send an E: to Donna Jeremiah, Corporate Communications, at djeremiah[.]frost.com, with your full name, company name, title, telephone number, company E: address, company website, city, state and country.
The Australian Market for Gears and Gearboxes in the Mining Industry is part of the Mechanical Power Transmission Growth Partnership Services program, which also includes research in the following markets: motors, drives, gears and gearboxes. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents.
The Australian Market for Gears and Gearboxes in the Mining Industry / P4BB