The mining market is big business. According to a recent PWC report the industry as a whole had a market cap of $926 billion in 2018 with revenues of over $600 billion. They’re huge numbers, but they don’t tell the story of an increasingly complicated global market.
The same PWC report also shines a light on some of the difficulties the market is experiencing now. It tells a story of limited large-scale new project approval, low capex and flat production figures.
So, the question is, what does the future hold for the market and how can companies negotiate some of the complexities and hurdles in order to ensure success in future? To try and find out the answer, at least in relation to the underground mining equipment market, I had a conversation with Jan Petzold, CEO of GHH Fahrzeuge, part of the Schmidt Kranz Group.
They’re a German mining and tunnelling equipment manufacture who manage to combine both traditional expertise with over 50 years’ experience in the market and a forward-looking approach as they invest in new technology and look to grow their team.
A Fragmented Global Market
We’ve already discussed the complexities of the mining space, but from speaking with Jan it became apparent that the global mining market should be thought about as a collection of smaller, highly individual markets. Even a medium-sized business like GHH find themselves working in territories as varied as South Africa, Germany, Russia, Chile, India and Africa, so for companies to be successful in future it’s vital that they are flexible and adaptable dependant on market demands.
As a case study, Jan said that GHH have seen a great deal of recent success in India through creating a totally different service offering to those they offer in other markets, with a focus on training centres.
Jan spoke of the importance of a solution that delivers what the market is looking for now and also try to develop what the market will be looking for in a couple of years’ time as products as complex as these “can’t be developed overnight”. This means that companies who have an accurate and detailed product roadmap are likely to be successful.
As we’ve already seen though, the best ‘new’ product for a particular market may not necessarily utilise the most cutting-edge tech – instead companies need to listen to their customer to bring technology to the market that meets that territory’s needs.
Technology isn’t Everything
Like lots of industries, the mining sector can be guilty of assuming that all clients want is the latest tech, innovation and gadgetry. We’ve all seen the latest mind-blowing videos of incredible new concepts but that doesn’t necessarily mean that equipment will work everywhere, straightaway.
Speaking to Jan, he mentioned that the future of this market will see companies exercising more caution with regard to new technology to make sure that there’s a good fit which combines reliability and ease of use. To do this, equipment manufacturers are going to have to work with their clients to provide solutions that work, instead of those that initially impress, but may actually be difficult to maintain.
Take digitalisation- it’s a hot topic at the moment and rightly so. GHH are involved, too. Jan mentioned that there’s some extremely exciting work being conducted in established markets in Australia and Chile to great effect. However, installing that same equipment in a less technologically-prone market such as the DRC likely wouldn’t make sense as the skills may not exist when it comes to repairs and maintenance.
But Technology is Exciting
I also spoke with Mortimer Glinz, CEO of the Schmidt Kranz Group on technology in the space and he spoke of the excitement surrounding alternative fuel sources, namely hydrogen-powered machines. The group as a whole are doing a lot of research into this area, the results of which GHH are sure to reap the rewards of in future.
It’s R&D in areas like this that is likely going to differentiate companies who want to stand out in future. As we’ve already mentioned though, those companies would do well to remember to ask why are we doing this? As well as what can we do? During this process.
Getting excited about technology in the market isn’t just restricted to creating brand new products either.
Companies that manage to leverage existing technology in new ways could start to see returns by using this in new ways. Take tunnelling, for example. Mortimer spoke about how cities and mega cities are looking for new ways to manage traffic in an environmentally friendly way, which could mean taking it underground. That could be a huge opportunity for manufacturers.
So as far as technological advances are concerned, there’s a lot to be excited about, but companies in the underground equipment space would do well to exercise restraint before rushing to embrace the latest trends for technology’s sake.
Stand out with Service
Whilst technology trends may come and go, that’s not the case when it comes to great service and in a market like this with so many moving parts to look after and as machines get ever more complex, the need for great service is only going to increase in future.
Both Jan and Mortimer agreed that good service is what will really make manufacturers stand out in future. We joked that prioritising aftercare rather than trusting the quality of the products is a change of philosophy for a German engineering company, but it’s companies like GHH who are able to take a step back and adapt to customer needs that are going to prosper in future.
We’ve already seen that manufacturers will need to be considered when it comes to different locations, technologies and with their R&D, so great aftermarket care is just an extension of that. This malleability can even see fundamental changes in business models to better suit the evolving market, for example rental instead of ownership or complete aftercare packages.
Speaking about the future market landscape, Jan summed it up well when he said:
“To win a customer first time is relatively straightforward. To win them second time, that's where the problem starts for companies.”
If we’re to believe that fewer large-scale projects are going to be approved, as we saw in the PWC report, then maintaining existing relationships and accounts is only going to grow in importance, perhaps more so than ‘hunters’ finding new business or tenders.
It’s in this service-orientated approach that Jan said he foresees opportunities being created for smaller companies in the market. An operator that could form 10% of a small company’s client portfolio may only fill .1% of a larger company’s. That’s not to say that the service will be 100 times better, but the extra care and attention that smaller companies will pay to smaller accounts could be a real selling point.
Another way that smaller sizes and less bureaucracy could be leveraged is in providing new solutions, like retrofitting their products onto existing systems to create cheaper solutions for the client.
Whilst it’s unlikely a mine operator will lose sleep over purchasing or using equipment made by one of the huge manufacturers, the future of the market could see savvy medium-sized businesses brave enough to innovate with their approach and service reaping the rewards in future.
It’s a tumultuous time in the mining space, but companies willing to put their client at the heart of their regional strategy, R&D and value proposition will be those that make the most of the opportunities out there.
Thanks again to Jan Petzold and Mortimer Glinz for their contributions to this article.
GHH are a company dedicated to changing mining for the better mining with the best mining talent. If you could be interested in joining GHH, get in touch with me today at firstname.lastname@example.org.
According to the FT, mining remains one of the industries where women are least represented and organisations have, in the past, been accused of setting lots of targets but taking little action.