MINING TYRES
With its Ultra Repair technology wherever it has customers using ultra large tyres, Kal Tire says there exists an opportunity to take some large injuries out of the scrap pile and turn them into usable product
Running hot
Paul Moore gets the lowdown from leading global OTR tyre consultants, tyre manufacturers and key tyre management companies. Trends include a return to shortages and a focus on haulage productivity and tyres
The main point to emphasise in today’ s mining or earthmover( EM) tyre market is that again there have been some shifts in tyre supply & demand. Principal at consultancy OTR GLOBAL – Mining Tire Solutions, Tony Cutler told IM:“ Believe it or not, we are back in the situation of a global shortage of earthmover tyres – in all sizes ranging from 24 in to 63 in rim diameter, although not, at least for the moment, to the same extent as what occurred between 2004 and 2011. Following the plunge in mined commodity pricing in late 2011, there was an almost immediate run-down by mining companies of on-site new tyre inventory. This in conjunction with reduced mining output generally, except iron ore and to a similar extent, copper, and the closure of many operations( notably coal) led to EM tyre manufacturers reducing tyre production. So, while there has generally been doom and gloom in the mining industry from 2012 until quite recently, the above chain of events has led to another EM tyre supply crisis – this time not solely demand led, with no surplus supply capacity, as occurred from 2004, but a combination of increasing tyre demand and underutilised manufacturing capacity.”
Cutler argues that the result has been the emergence of a second EM tyre supply crisis – starting in late 2016 / early 2017 – which has now become more critical as global mine output is starting to ramp up again, and the tyre manufacturers cannot replenish factory resources( primarily adequately skilled and trained labour) quickly enough to meet the demand.“ What in mid-2017 was thought to be a significant but short-term issue – likely to be rectified by mid-2018 – is currently seen as an emerging crisis likely to last well into 2019 and could extend further if mining activity picks up faster than expected.”
Dan Allan, Kal Tire Senior VP, Mining Tire Group told IM:“ In the mining industry, we move through various phases of cycles very quickly. This is usually so mining companies can take the best advantage of supply and demand and commodity prices. As a result, the entire supporting industry – from tyres to heavy equipment and even fixed plant – goes through a very fast ramp up. It is – and has been – the nature of mining for many cycles. From a tyre perspective, we have seen customers go through the‘ down’ part of the cycle. They behave as most business would: they try and reduce their investment in working capital, and they work at curtailing their capital expenditures. So, we have seen many customers over the last few years work hard at solutions to reduce their inventory. This has included simple inventory holding, but also more creative things, like consignment agreements,‘ leasing’ tyres, or other models. We have also noticed a lot of development in the gold mining space. For example, West Africa is very active currently. So, these factors: reduced inventory holdings on the ground, and increased activity in some areas with new mines or increased production goals have had an impact. We should not forget that memories can be long … many customers remember the shortage issues from the 2010 era and the pain that put to some mining companies. Certainly, I would expect some customers are increasing their stock holdings in order to not get caught short.”
Cutler states that the problem was initially in the medium to large( 45 in to 63 in) sizes) but has now extended to all EM tyre sizes from 24 in up.“ Regional sales staff of each of the
mainstream manufacturers are being canvassed for supply from mines who have had agreements with other manufacturers who can no longer meet their client’ s requirements for new tyres. Stand-alone, green-field mining projects are becoming desperate to source tyres for their newly ordered equipment fleets.”
Not everyone agrees the shortage is at former levels. Bruce Besancon, Yokohama Tire VP of OTR Sales argues that for the markets it serves, up to 57 in bias tyres, that while there may be some‘ relative’ shortages of a few tyres( specific design / tread compounds / etc) that this period of time is not like that of the 2004-2008 shortage timeframe.“ Overall there is sufficient production – however with some recent increases in the demands of OEMs, some manufacturers have allocated more product to them and thus giving a lower allocation to the replacement market. Yokohama has actually done the opposite by allocating more product to the replacement market than original equipment market. Most‘ shortages’ are occurring in the medium wheel loader area and some of the 100 t trucks – both of which should be short lived as there is no shortage of production capacity.”
Looking at other options
It is arguable whether this means there is going to be revival of lower-tier manufacturers such as Chinese and Indian EM tyre makers as alternative sources to fill any gaps left by the big three of Michelin, Bridgestone and Goodyear and other premium brands such as Titan International and Yokohama. However, Cutler states:“ While there are far fewer options now regarding alternative earthmover tyre manufacturers compared with the 2004 to 2011 shortage period, the good news is that – in general – only the best of the second-tier manufacturers remain in operation.”
Companies to watch include UK-based MAXAM Tire, which since 2011, has been part of China-based Sailun Jinyu Group, one of the top 20 leading tyre manufacturers in the world. MAXAM continues to develop new patterns and sizes to meet the increasing demand from users. It is shortly introducing a new pattern in 27.00R49, the MS403 which will continue to build on good results from the existing patterns MS401 and MS402.“ In larger sizes, for example, 33.00R51, the MS403 MAXAM tyre is delivering excellent results in Russia, Indonesia and the US”, says Jeff Hughes, MAXAM Tire Sales Director Mining & Giant Tire Solutions. MAXAM have also extended the range to
JULY 2018 | International Mining 13