India is going to see more on technological and higher grade of safety parameters of the equipment, enhanced emission norms, reliability and capability, both in terms of machine and product support,” says Samar Pal, National Head for Mining, Liebherr India.
Excerpts from the interview…
The shift towards the latest and more advanced high capacity heavy earth moving equipment of large capacity still seems to be in nascent stage. What are the factors contributing to it?
Historically entry of large mining machineries remained unpredictable. After 2009, there had been only three bulk entry of large mining equipment in India. Moreover, the entry of large mining equipment is dependent on different stage of project implementation. Year 2013 and 2014 were most stagnant. Some of the factors that block the entry of high capacity equipment are delay in implementing full proof commercial mining; volatility in cost of imported coal and commodities, regulatory standards which needs upgradation, and increased demand of domestic commodity.
Do you think opening up of mineral deposits for FDI will bring a paradigm shift in the mining methods and the way in which mining companies deploy equipment?
FDI in the mining sector is definitely going to bring about qualitative changes in the purchase selection criteria. Reputed and major contractors are well aware of the global best practices and they are already trying to adopt such practices in India. With more and more FDI in this sector, India is going to see more on technological and higher grade of safety parameters of the equipment, enhanced emission norms, higher category of infrastructure, reliability and capability, both in terms of the machine and product support, training etc.
What is the range of high capacity trucks and super shovels offered by Liebherr?
Liebherr has got total nine models of hydraulic excavators from 100T to 800T machine weight with maximum up to 4000HP and 47.5 cu m bucket capacity. In case of off-highway trucks we have got two platforms, with maximum upto 3750 HP and 363T hauling capacity.
What is demand-supply scenario and what capacity trucks are in demand?
In the government sector, there was a recent tender for 44 units of 240T trucks from Coal India. Apart from this, there is no such major requirement visible in the category of truck range as of now. The size of the truck which is mostly in demand in India is the 100T class. I do not over-rule that demand surge for higher capacity trucks; it may not happen in the near future as there is still a long way to go in terms of mine site infra structure which is needed to operate such ultra- sized trucks.
How do you assess the financing options for high capacity shovels and trucks etc?
High capacity shovels and trucks are tied to projects which can avail concessional customs duties provided it is imported in title of project authority. Excavators and particularly for mining trucks, the regular customs duty is very high, which deters operating lease by third party as the cost of asset acquisition goes up. The high interest rate of domestic borrowing deters the buyer to go for very long term finance. Innovation has to be in terms of rendering benefit of low cost funds of developed countries in long term project funding mitigating exchange rate appreciation.
Is there any capex happening from the major PSUs that may trigger a demand pull?
In fact there are many new projects that has been announced; the 37000 crore expansion plan of Nalco, over 7290 crore have been allotted to for AMRUT (Atal Mission for Rejuvenation and Urban Transformation ) for smart cities, Ministry of Shipping to invest around 14000 crore on various port projects etc.
We have already seen record low pricing in recently concluded large equipment tenders. What is your take on this?
Improved technology has got value addition. No user can expect that an equipment with superior technology shall have a throw away price. The way I see to it is, with the decrease in the demand of coal across the world in the recent years, the utilization of the large sized equipment has significantly gone down which resulted into unforeseen non-moving stock of machines. On the other hand, India has just experienced the new strategy of increased coal production plan. Naturally having seen the business environment being little hazy at the moment , many OEM’s faced a cost pressure and went ahead with certain amount of desperation in the price level . I think , this phase is temporary and the level of desperation will settle down over the time with reasonable margin ensured.