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Komatsu expands into extractives after multi-billion dollar deal

Japanese manufacturer Komatsu announced it would be buying the US-based company, which is known for supplying machinery to mines and for its Montabert-branded breakers in the quarrying industry.

Joy Global’s board of directors unanimously approved a definitive merger agreement, which is expected to be completed by mid-2017, subject to a shareholder vote.

A Komatsu company statement issued on 21 July stated that it intends to run Joy Global as a separate subsidiary and retain the names of its P&H, Joy and Montabert-branded equipment.

“This announcement is an important milestone, but it’s still too early in the process to know all of the details,” Joy Global spokeswoman Caley Clinton said. “Until the acquisition closes, we will be operating as a separate, stand-alone organisation and it will be business as usual.

“Long term, we are confident in the potential for growth and success that will come with being part of a larger, even stronger business, and that includes expanded opportunities for our employees.”

The agreement is expected to increase the range of equipment available to customers of both companies.

Despite being engaged with the mining industry since its inception in 1921, Komatsu’s current mining portfolio comprises earthmoving vehicles, such as loaders, haul trucks and excavators, but not specific mining equipment for drill and blast, tunnelling, underground crushing and conveying systems, longwall systems or room and pillar/entry development.

The press release stated Joy Global’s line-up of surface mining equipment, including rope shovels, super large wheel loaders and draglines, were not items it offered, while the rope shovels and super large wheel loaders would “pair well” with its large electric dump trucks.

The acquisition means Komatsu can become “a meaningful participant in underground mining as well”, according to the statement.

Expanded options

Clinton told Quarry the deal would likely expand the options available to quarry operators in Australia, where Joy Global has a manufacturing facility.

“Complementary products and services will help the combined company strengthen its position in the marketplace and give us the ability to offer broader systems and solutions across a wider scope of mining and construction applications,” she said.

“Komatsu plans to leverage both companies’ leading technologies to pursue further product and service innovation that enhances mine safety and productivity.”

Joy Global president and CEO Ted Doheny said the company was mindful of the current difficulties facing equipment manufacturers before it entered into the agreement.

“Joy Global’s board of directors, in making its determination, considered the challenging market conditions the company believes are likely to persist,” he commented.

“The mining industry continues to face cyclical headwinds from oversupplied commodities and reduced end user demand resulting in cash flow restrictions for most producers, creating an increasingly challenging environment.”

Joy Global was founded in the USA in 1884. It now employs around 12,000 people in 20 countries including more than 1200 in Australia.

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