S. Africa's Barloworld warns of slowing mining demand

South Africa's Barloworld warned of weakening demand for mining equipment on Monday as wildcat strikes at home and stalling growth in China force miners to scale back capital expenditure.

South Africa's Barloworld warned of weakening demand for mining equipment on Monday as wildcat strikes at home and stalling growth in China force miners to scale back capital expenditure.

But the company said its car dealerships, logistics and forklift businesses would take up the slack, helping it deliver even higher growth in 2013 after a forecast-beating 46 percent profit rise this year.

Barloworld, the biggest dealer of Caterpillar earth-moving equipment in southern Africa, is a barometer for the health of the region's vast mining industry.

It said its order book for heavy-duty mining equipment in southern Africa plunged 25 percent to 3.9 billion rand ($438.51 million) at the end of September.

Production at many South African mines - particularly in platinum and gold - has yet to recover after a wave of wildcat strikes this year that marked South Africa's deadliest labour unrest since the end of apartheid in 1994.

The industry is also grappling with weaker demand for commodities due to slowing growth in China.

"We have seen mining companies across the world pulling back on capital expenditure because the costs are too high, projects are becoming complex and take longer to complete," Barend Ritter, a portfolio manager at Sanlam Investment Management.

But Barloworld also expects demand for heavy-duty equipment to hold up in other southern African countries such as Mozambique, where enough gas to supply Germany, Britain, France and Italy for 13 years was discovered recently.

 

Have Your SayLeave a comment