Tags: Caterpillar | Demand | Coal | Mining

Caterpillar: Demand From U.S. Coal-Mining Industry Slows

Wednesday, 06 June 2012 02:13 PM

Caterpillar Inc., the world’s largest maker of construction and mining equipment, said demand from the U.S. coal-mining industry is slowing after a mild winter curbed demand for the fuel.

Global demand for the company’s machinery is still at a “very, very high level,” Steve Wunning, Peoria, Illinois-based Caterpillar’s president, said today in a telephone interview from Zhengzhou, China. “The only area we’re seeing a bit of a slowdown is in U.S. coal.”

U.S. demand for coal in electricity generation will drop 9.7 percent this year to the lowest level since 1984, according to the U.S. Energy Department. Some power plants have switched to using natural gas after surging output from hydraulic fracturing of shale rock sent prices to the lowest in a decade.

“Global demand for our equipment will offset any slowdown in the U.S. as it relates to mining,” Wunning said.

Caterpillar made an offer in November to buy Hong Kong- based ERA Mining Machinery Ltd., a coal-mining equipment maker, for as much as HK$6.89 billion ($890 million) to gain sales in China, the world’s largest producer and user of coal.

The bid was approved by investors holding 99 percent of ERA’s shares and the company will become a wholly-owned subsidiary of Caterpillar when the deal is completed on or about Oct. 1, both companies said in a statement on June 4.

“We don’t see as much growth in the U.S. in coal as we do in other regions like China and like India,” Wunning said. “The longer-term growth in the U.S. is questionable because the government is not permitting many new coal mine operations and not permitting coal-fired power plants.”

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Wednesday, 06 June 2012 02:13 PM
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