Hoping for revival
After positive judicial interventions in mining activity, things are getting back to normal for mining equipment industry, even as greenfield projects are hard to come by.
Limestone segment comes next only to coal segment in machinery consumption. Mining machines like hydraulic excavators, dump trucks, tipper trucks, crawler dozers, wheel loaders, motor graders, surface miners etc., are used in these mining activities.
"Currently, the capacity utilisation in the cement industry ranges from 65 to 75 per cent depending upon geographical locations; but we see a continuous appetite for our customers in both brownfield and greenfield expansions," says Partha Mookherjee, Head - Mining Equipment Business, Larsen & Toubro Limited, which also offers complete mining solutions for limestone segment right from application engineering, optimum fleet requirement, cost per tonne analysis, lifecycle costing and crushing solutions.
About a few decades back, least capital cost (or 'L1') was considered to be the best option while procuring mining assets. But it has given way to lifecycle costing as a major procurement decision criterion. "The industry now appreciates that initial capital cost contributes only 15 to 20 per cent of the lifecycle cost whereas fuel and spare parts form over 60 per cent of the lifecycle costing," says Mookherjee.
There has been a disruption in mining activities starting with Supreme Court judgement in the coal and mining sector coupled with adoption of stringent norms in mining lease awards and resettlement and rehabilitation (R&R), which had slowed down the overall process of new projects coming up. "We are, however, hopeful that with the overall positive business scenario and growth prospects, the industry shall revive sooner than later. The slowing down of the industry has impacted the offtake of mining machinery but things have started looking up of late with enquiries and overall buoyancy," says Mookherjee. In the limestone industry, the impact was minimal for two reasons: the industry was operating at 70 to 75 per cent of their capacity and the brownfield expansion kept the clock ticking along with debottlenecking. However, the greenfield projects took a backseat for a while. The mining sector is currently sluggish due to judicial intervention, which has impacted the mining equipment business. However, construction sector in India is doing good due to increased demand from real estate, roads and infrastructure projects. "Due to high priority of the Government of India, infrastructure segment has created big market for these equipment," Mookherjee adds.
Besides fund inflows to DMF Trusts, two determining factors related to DMF implementation are the institutional arrangements of DMFs and planning and allocations for DMF funds. On both these fronts, the progress in most districts is still in the inception stages, according to the report released on July 31, 2018.
The following are the edited excerpts of the report:
B.S. Srinivasalu Reddy