Crain’s Chicago Business and the Milwaukee Journal Sentinel both have stories about the 2014 prospects for mining — and the prospects aren’t good.
Obviously, this bears close watching for South Milwaukee and Caterpillar.
From the Crain’s piece, entitled “How Mining Woes May Force Cat to Change Strategy” …
In 2011, Caterpillar shelled out more than $8 billion for South Milwaukee, Wis.-based mining equipment manufacturer Bucyrus International Inc. It was the biggest acquisition in the company’s history. A year later, the company opened its checkbook once again, spending about $700 million on China’s ERA Mining Machinery Ltd.
Last January, ERA was marred by a financial scandal that cost Cat $580 million. Scandals aside, Mr. Oberhelman’s investment is foundering because macroeconomic trends have hammered demand for ore. Sales in Cat’s resource industries segment, which is principally mining, declined 42 percent from 2012. In the third quarter, mining revenue made up only 22 percent of sales compared with 32 percent the year before. And with commodity prices still flagging and the demand for mining equipment still lackluster, that only means more bad news for Cat in 2014.
“It begs the question: If mining is not a key driver, as investors what do we do?” says Mircea Dobre, a senior analyst at Milwaukee-based Robert W. Baird & Co. “Do we wait four or five years, or is there something else that is going to drive growth?”
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