Weak Demand Dampens Growth Forecasts For Mining Equipment Makers
After a decade of steep and sustained growth, the mining equipment business is beginning a cyclical downturn, according to a new analysis by Lux Research.
In 2013, capital spending in the mining sector is predicted to decline by 24% to $76 billion compared to the previous year.
Caterpillar CAT -2.11%, the Peoria, IL-based maker of construction and mining equipment, reduced its 2013 sales and profit forecast due to weaker than expected demand from the mining industry.
Over the past 12 years, the mining equipment has grown into a $1 trillion market, experiencing annual growth rates as high as 600%.
BHP Billion Ltd. and Rio Tinto RIO -3.03% Group have reduced capital expenditure by billions of dollars this year.
Despite the downturn, the long-term future still seems bright for the mining equipment market.
“Long-term trends, including increasing scarcity of key minerals and wide-scale development of East Asia, point to the need for continued spending in mining,” said Brent Giles, a Lux Research Senior Analyst.
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