Australian mining equipment manufacturer Industrea is being acquired by General Electric, in a major bid by the US company to increase its presence in the resources sector.
GE will pay $700 million in a friendly takeover of Brisbane-based Industrea which has a strong presence in China and a payroll of 700 across four departments including mining equipment, mining technology, gas management and mining services.
GE Australian and New Zealand president Steve Sargent said the move on Industrea was strategic, allowing it to tap into the $US61 billion global mining equipment industry and exposing it to the upside for further growth in mining in Asia.
The industrial giant is also buying US equipment supplier Fairchild International, an independently owned and operated underground mining equipment manufacturer based in Virginia.
“It is our first foray into mining equipment purely for miners and what these two companies do is start to build out our product portfolio. GE plays well in industries where we can leverage our global distribution and our global supply chain capabilities,” says Steve Sargent.
Both deals are expected to enhance GE’s product offering to about 35% of the underground mining value chain, providing equipment to major mining companies including BHP Billiton, Rio Tinto and Fortescue Metals. GE forecasts 8% growth each year in the global mining equipment industry up to 2020.
The company already provides power generation for resources companies including a number of liquefied natural gas (LNG) projects being built or proposed across Australia. GE also provides water treatment, trains, signalling on lines, sub-stations and electric propulsion systems on mining trucks.
Steve Sargent says despite recent negative press about growth in China slowing, the desire of developing countries to urbanize was an “unstoppable trend” and Australia’s energy, LNG, iron ore, coal and copper would stay in demand.
GE says it believes the Asia-Pacific region is the market with the strongest growth potential due to robust increases in mine production and related machinery sales in China, India and Indonesia, with China accounting for 57% of all new mining equipment demand between 2010 and 2015.