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Komatsu’s China Sales of Mining Machinery to Rise 50% (Update1)

March 12 (Bloomberg) — Komatsu Ltd., the world’s second- biggest maker of large dump trucks and excavators, expects sales in China to rise by half as the country’s 10-percent growth rate drives demand for resources such as coal and iron-ore.

Sales in the year starting April 1 are expected to rise by between 40 and 50 percent from the current fiscal year, Kazuhiko Iwata, the president of the company’s mining division, said. Mining machinery sales account for about 30 percent of Komatsu’s construction equipment division revenue, which is forecast to be 1.3 trillion yen ($14 billion) this year, Iwata said.

Global sales of machinery are forecast to increase 10 percent to near record levels achieved in the year to March 31 last year, Iwata said. China, the biggest user of copper, coal and steel, is also driving demand for mining equipment overseas as it scours the world for minerals to sustain economic growth.

“China is spurring mining in resource-rich nations” such as Australia and in Latin America and Asia, Iwata said yesterday in an interview in Tokyo.

Economic growth in China accelerated in the fourth quarter to 10.7 percent, the fastest pace since 2007, because of stimulus spending, subsidies for consumer purchases and a record 9.59 trillion yuan ($1.4 trillion) of bank lending last year.

China, the world’s most populous nation, may expand 9 percent in 2010, according to the World Bank, and is expected to overtake Japan as the world’s second-largest economy this year.

Demand from China has pushed up raw materials prices. Iron- ore and copper prices doubled in the past 12 months.

Open Pit Mining

Komatsu, which has fallen about 1.2 percent this year, fell 0.3 percent to 1,911 yen on the Tokyo Stock Exchange.

Komatsu, which includes Rio Tinto Group and Anglo American Plc among its customers, has more than 35 percent of the global mining-equipment market, the largest share after U.S.-based Caterpillar Inc.

Komatsu derives about 5 percent of its sales for mining equipment from China.

“The proportion of sales volumes in China is small, but we’ll need to pay attention to the market to capture its growth potential,” Iwata said.

The country is also shifting to open-pit mining from underground mines, giving Komatsu the opportunity to expand sales of dump trucks, Iwata said.

China closed 1,088 small coal mines in 2009 because they were unsafe, the official Xinhua News Agency reported on Jan. 20. Coal mines claimed the lives of more than 2,600 people last year, Xinhua said.

Komatsu has sold trucks to companies including China Shenhua Energy Co. and China Coal Energy Co., the country’s two largest coal producers.

Komatsu expects global sales of mining machinery will fall about 10 percent after the financial crisis cut orders from mining companies in the current fiscal year…read more at the Bloomberg