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Manufacturer Reaps Benefits of Market Recovery

Richard Fangel - FLSmidth
Director General

STORY INLINE POST

Wed, 10/18/2017 - 10:01

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Q: What makes Mexico attractive to a global engineering firm such as FLSmidth?

A: Mexico offers solid opportunities for world-class equipment manufacturers. Indeed, we believe it is one of the most attractive destinations in the world from a manufacturing point of view. Its logistics infrastructure for both imports and exports is well developed and the devaluation of the peso against the dollar during 2016 has provided a further boost to foreign manufacturers by making local prices more competitive. In fact, it is now more expensive to manufacture in some parts of China than it is in Mexico, which was unthinkable five years ago. When adding these competitive prices to the free trade agreements Mexico has with over 40 countries, it has become a vital manufacturing hub that offers great value to both Mexican and foreign companies.

Q: How has the market in Mexico reacted to the rise in precious metals prices in 2016?

A: During the recent downturn producers were focused almost exclusively on cutting costs and streamlining operations but as prices have risen they have turned their attention to increasing production levels in a bid to increase output. This has led to more plant upgrade projects starting up throughout the country as operators want to extract as much as possible to benefit from slightly higher prices. This has, of course, been of great benefit to the whole supply chain because mining companies need to buy more equipment and modify the existing equipment.

This trend can particularly benefit companies like FLSmidth. Our highlights for 2016 include the installation of a stacking conveyer system for Grupo México at Buenavista del Cobre and the extensive work we did on the Peña Colorada expansion project that will go onstream in early 2017.

Q: What role does M&A and JV activity play in FLSmidth’s strategy?

A: Over the last 15 years, FLSmidth has been acquiring many companies with specific products that add value to our portfolio. Depending on the product it will from time to time be more beneficial to buy another company and integrate that into The FLSmidth Group product flowsheet than to develop an existing product design in-house. We constantly have to evaluate our needs and decide what will bring results to our clients and returns for our investors. That said, it is undeniable that there has been a growing trend in the company in recent years to focus on in-house development. We have a talented team of engineers and we see synergies from plant operating experience back to our design engineers

In September 2016, we also announced a JV with the stateowned Chinese heavy-machinery manufacturer Northern Heavy Industries Group (NHI). The new JV operates under the name NHI-Fuller and provides the mining industry with mid-market crushing equipment. Fuller was an independent US-based equipment manufacturer specializing in cement and minerals until acquired by FLSmidth in 1989. China will be the initial focus for the venture but in time it will incorporate other markets, including Mexico.

Q: What are the most innovative solutions FLSmidth offers the industry?

A: One of our newest designs is the nextSTEP. This rotor/ stator can be applied to existing flotation cells to generate substantial energy savings as well as increased recovery. The product was launched in early 2016 and the pilot tests have confirmed our expectations for increased productivity. 

Elsewhere, our research and development team is constantly working in the lab to update and improve existing products and processes. In Mexico, we are constantly working to improve our aftersales service. To this end and when the needed state fiscal legislation is ready, we will expand our service center in Zacatecas to convert it into an inbound park, which will allow us to move more spare parts and cater to our clients’ needs more efficiently.

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