FLSmidth supplies the minerals and cement industries globally with everything from engineering, single machines and complete processing plants to maintenance, support services and operation of processing facilities.
Business Drivers and Fundamentals
The current strong demand for key minerals and metals is set to continue over the next decade, as the emerging markets commodity intensity will continue to rise. Combined with a worldwide shortage of mining capacity, sustainable high price levels for commodities and an industry struggling with a near-term supply response, FLSmidth is well positioned to meet market demands, secure its leading position and deliver value throughout the supply chain.
Minerals industries drivers
Many factors influence the demand for minerals and metals processing equipment. The key factors are:
- Global market outlook
- Long-term developments in commodity prices
- Urbanisation and industrialisation
The overall driver for sales in FLSmidth's minerals segment is the investment level of mining companies, which is closely correlated with the long-term global market outlook for the supply/demand for minerals and metals, and the long-term development in commodity prices.
The market fundamentals appear very supportive for the decades ahead, with growing urbanisation and industrialisation in the developing countries, particularly China and India. This should lead to continuous rising demand for infrastructure, housing and consumer goods, which are all intensive consumers of minerals and metals.
The mining companies consider the demand for key metals like iron ore and copper to be in place for the coming decades. The high demand coupled with a worldwide shortage of mining capacity has resulted in a tremendous increase in commodity prices over the last 10 years.
Cement industry drivers
Many factors influence the demand for cement manufacturing equipment. The key factors are:
- Growing GDP
- Investments in infrastructure
- High energy prices
The overall driver for sales in FLSmidth's cement business is the level of new global contracted kiln capacity, linked closely to local or regional demand/supply imbalances for cement. The greatest potential for new cement capacity investments is among the major cement consuming emerging nations with expected high growth rates in the coming years.
This is particularly relevant in key markets where FLSmidth has a strong presence, such as India, where cement consumption is rising fast on the back of strong economic growth and rural demand; Brazil, which is set to enjoy a cement boom in coming years due to a significant increase in housing and large-scale construction projects; and Russia, where a recovery in the economy coupled with high oil prices will drive a return to investment in the modernisation of the production capacity.
In addition, there has been an increasing demand for energy-efficient and environmentally friendly solutions due to high energy prices and an increasing level of environmental protection legislation.