Sandvik is seeing a “slower and more gradual shift than we thought a few years ago” in mining towards battery-electric vehicles. “I don’t think we will come back to the boom we saw in 2022-2023,” CEO Stefan Widing said on the company’s latest financial results call.
He said strong customer investment in equipment and good demand for parts and services drove Sandvik’s strong order intake in the June quarter. Mining orders (55.5% of the group total) were at a record level of SEK17.89 billion (circa-US$1.87 billion) for the period. Sandvik said mineral price levels, capex projections and announcements of regulatory relief in certain countries were expected to support healthy ongoing mining demand.
Mining revenues contributed 52% of Sandvik’s Q2 SEK29.7 billion Q2 total, which was up 3% year-on-year, and 51% of the first-half total of SEK59 billion (US$6.16 billion).
Sandvik said five large mining orders accounted for SEK2.1 billion, including the company’s largest ever BEV order placed by South32 in the USA and another one for underground mining equipment from La Cantera Desarrollos Mineros, one of Mexico’s leading underground mining contractors.
Widing said mining load and haul BE equipment contributed more than 10% of orders in 2022-2023.
“Now we’re back to sort of high single digits,” he said. “2024 was less than that.
“I think we will see a gradual increase going forward. We definitely see interest. I met one of our key customers in Mexico just a few weeks ago. They went with BEVs. They see the benefits. They are saying, for our expansions, we’ll continue with BEVs; we’re not going back to diesel.
“There are many customers that have not seen that light yet.
“And there are, of course, still challenges with total cost of ownership or mining infrastructure in many mines.
“I think this [large South32 order] was a good sign in that the trend is still there, but I think we will see a slower and more gradual shift than we thought a few years ago.”
Widing said underlying mining industry demand for new and replacement equipment was strong enough to have Sandvik weighing manufacturing capacity expansion despite a broader global picture of economic and trade uncertainty.
“When we do that … assessment of the complete picture that we have to do … we are now sitting with a record-high order backlog [and] we have lead times that, in some products, are getting close to the pain point for customers,” he said.
“At that point we risk losing orders if we cannot deliver in time.
“If we saw this as a very temporary – we got a couple of major orders – that would not be a problem.
“But we see underlying demand on both smaller and mid-size orders being strong. We see healthy pipeline for also some larger deals.
“On top of that we know that our equipment fleet is aging.
“So, if we put this all together, we do see a need to increase production capacity to be able to meet the demand that we expect. Of course, that’s always a risk you take, especially in today’s world. But to preserve our position with our customers we feel this is the right thing to do.
“We have, of course, a new load-and-haul factory in Malaysia [which] comes in very handy from a timing point of view. We have expanded production capacity in Tampere [in Finland]; hired several hundred new people.
“This is a sign that we have a belief in that the backlog will stay strong.”
