FENNER's conveyers at work.

FENNER's conveyers at work.

Conveyer Co's Buck Retrenched Spending Levels

Issue 55, September 2013

Industrial conveyer belt manufacturers are investing across the sector to expand capacity to meet strong sales, having emerged impervious to the current mining downturn.

London-listed Fenner, which trades as Fenner Dunlop, told the market this week that things have “stopped getting worse in Australia”, where the company spent $20m last year on doubling capacity at its Kwinana plant, catering to iron ore miners in the Pilbara.

Fenner reiterated its full year sales guidance of £825m ($1.3bn), against £831m in 2012, forecasting a “return to growth” next year based on order intake levels. Revenue at the company has risen more than threefold since 2003.

Vienna-based rubber glove group Semperit AG has meanwhile announced a €40m ($53m) investment, its largest internal investment to date, in its Belchatow conveyer plant in Poland, attributing consistent sales growth to the “megatrend of mining."

The plant produces steel cord reinforced belts, aimed at coal, copper and iron ore. Semperit says its conveyers use 25 per cent less energy than others on the market. Heavy duty industrial belts can weigh over 60 lbs per square ft, running at 1,000 feet per minute.

Japanese tyre group Bridgestone has also followed suit, announcing a Y3bn ($30m) investment in its Rayong conveyer plant in Thailand. The announcement follows a Y5bn upgrade of its Yokohama plant in Japan, completed in 2011. Tyre rival Goodyear sold its belting business in 2007 to private equity group Carlyle for $1.5bn, whilst Joy Global spent $270m on Continental Conveyors in early 2008. Revenue has not been reported separately since.

Strong sales by conveyer companies demonstrate the recurring and intensive investment demands levied by existing mines and the difficulties for mine operators in structurally lowering their expenditure levels. Conveyers represent the artery of cash flow for mine operators and are typically replaced every 3 to 5 years.

64 per cent of Fenner’s conveyer revenue comes from replacing worn-out belts, with a further 22 per cent derived from servicing and repair. “There is a school of thought that Fenner is a mining stock,” said chief executive Nick Hobson this week, “but we provide consumables for mines and there is a big difference.”

“We provide consumables for mines and there is a big difference.”

RELATED NEWS

Riversdale Founder Creates New Iron Ore Champion

Former Glencore boss consolidates iron ore juniors
in the Labrador Trough

............................................ 

Brownfield Booming
as Gold Exploration Contracts

Drillco's Hughes and Swick
show where industry
investment lies

............................................

Coal Transit
Thrives as Miners
Struggle

QR National presses ahead with capacity expansion, despite weakening coal prices

............................................

Loeb-Aron-&-Co..jpeg
Hallgarten-&-Co..png

............................................

Rapaport: Bomb Threats, Diamonds & Bulletproof Vests

Martin Rapaport's perilous route to becoming the diamond industry's most influential body

Franco-Nevada Calls
for Syndicated Royalty Deals

Now is the time to buy assets says Franco's David Harquail,
with cash of $840m