Analysis of promoting and hindering factors in mining machinery industry

First, mining machinery industry promoting factors analysis

(1) Downstream supply-side reform, the industry market concentration continues to strengthen

Since 2013, due to the importance of green economic development, the state has taken the measures of "closing small mines and opening large mines", gradually opened the supply side reform of sand and gravel mines, and forced small and micro mining enterprises with small production capacity and irregular environmental protection measures to gradually withdraw from the market. Attracting central enterprises with financial strength and high environmental protection standards, local state-owned enterprises and some powerful private enterprises began to enter the sand and stone mining industry. In 2019, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Natural Resources, the Ministry of Housing and other ten departments jointly issued the "Several Opinions on Promoting the High-quality Development of the mechanical sand Industry", requiring that by 2025, the capacity of ultra-large mechanical sand enterprises with an annual output of 10 million tons and above should account for 40%. Outdated production capacity that fails to meet standards in terms of emissions, energy consumption, water consumption, quality and safety will be eliminated in accordance with the law. During this period, the number of registered sand and gravel mines in the country dropped from 56,032 in 2013 to 17,351 by the end of 2022, the number and proportion of medium, large and super-large mining enterprises increased significantly, and the proportion of small and micro mines decreased year by year.

(2) The implementation of the "Belt and Road" strategy has brought new market growth

Cooperation in the field of mineral resources is an important part of the implementation of the "Belt and Road" strategy, and is a key area to transform geographical proximity and resource advantages into economic growth advantages. The countries along the "Belt and Road" have rich mineral resources and are the main supply base of mineral raw materials in the world. Among them, the Central Asian region is concentrated and very rich in mineral resources, but there is a general problem of relatively weak exploration, development and exploitation capacity, infrastructure construction mainly relies on foreign capital support, and key equipment is mainly imported from developed countries, so although it has obtained a lot of economic benefits with its resource advantages, it is also facing a lot of pressure to reduce costs and increase efficiency. In the context of mining globalization, the countries along the "Belt and Road" and China have a good foundation for mineral resources cooperation, and resource cooperation can further promote production capacity cooperation and economic interconnection, laying the development foundation for the construction of a regional community of destiny. Therefore, the mineral cooperation of the countries along the "Belt and Road" is the only way to achieve complementary advantages. Today, many countries along the Belt and Road have deeply realized that through the construction of the Belt and Road, they will be able to share the dividends of China's reform and development, and transform the advantages of resources, technology and capital in the region into market and cooperation advantages. To this end, countries are enthusiastic about mining cooperation along the route. Therefore, domestic mining machinery manufacturing enterprises can really "go out" in the implementation of the "Belt and Road" strategy and fully enjoy the dividends of openness and cooperation.

(3) The continuous rise in metal prices has brought about a continuous increase in downstream expansion intentions

In recent years, metal prices have continued to rise, for ferrous metals, in the past two years, iron ore prices have risen significantly in the shock, from 2019 to June 30, 2022, China's iron ore index has grown from 254.10 to 440.88. For non-ferrous metals, the trading price of non-ferrous metals in China has been affected by international trade friction since 2020, and the overall trend is rising, and the price index of non-ferrous metals in China has increased by 14.30% in 2020 and 17.10% in 2021. Under the upward trend of metal prices, the willingness of domestic mining enterprises to expand production will be fully opened, and the continuous investment willingness of downstream metal mining customers will be high, which will bring stable business sources for the industry and form a strong growth driver.

(4) The demand for downstream sandstone building materials industry is stable and is expected to maintain steady growth

In the 14th Five-Year Plan, the state clearly pointed out that it will promote infrastructure construction in a coordinated way.  At the same time, a series of measures such as national supply-side reform, green mining, illegal sand mining into punishment, and environmental protection law revision will stimulate the demand for mechanical sand, while driving the market demand for mining machinery industry such as crushing and screening.

2, mining machinery industry hindrance factors

(1) The transformation of energy structure has an impact on the mining machinery industry

The scale of industrial development has brought the golden age of mining machinery manufacturing industry, but in recent years, with the new energy occupies an important position in people's life and work, the golden age of mining machinery development has gradually receded. Although traditional energy is still the mainstream of national energy demand, the demand for mining machinery has gradually slowed down.

(2) The total amount of mineral resources is gradually declining

In addition, with the increase of mining efforts, the total amount of mineral resources in China gradually declined, many mining areas no longer need a large number of mining machinery, the original mining machinery can also meet the daily needs, for energy development, the country has to put the vision to foreign countries, explore foreign mineral resources, buying mining may be the future development trend. The lack of domestic mineral resources for mining machinery demand is not very high.

(3) Macroeconomic downturn affects the demand for mineral products

Due to the adverse impact of the novel coronavirus epidemic, changes in the international economic environment, geopolitical conflicts, international oil price shocks, US dollar interest rate hikes, and the escalation of Sino-US trade frictions, China's economy has been impacted to a certain extent since 2020. The economic growth forecasts of the International Monetary Fund (IMF), the World Bank, the United Nations and other institutions, as well as indicators that are forward-looking indicators of economic growth, show that some economies in the world face the risk of economic recession in 2023. Traditional machinery manufacturing industry may be suppressed to a certain extent, mining machinery research and development and manufacturing will inevitably be affected, from the economic crisis, the growth rate of mining machinery development gradually declined, may continue to this state until the recovery of the world economy.

(4) Steel price fluctuations affect enterprise cost control

With steel as the main raw material, the cost of large castings, steel, profiles and other equipment core parts accounts for the total cost of equipment raw materials is higher, and iron ore is the most important raw material for the production of steel, so the price trend of iron ore and steel has a greater impact on the price of upstream parts and components, and indirectly affects the manufacturing cost of mining machinery. Since 2020, the price of iron ore and other commodities has fluctuated, which has brought certain fluctuations to equipment manufacturing costs. It is foreseeable that, affected by the trade frictions between China and India, Australia and other countries in the short term, the prices of raw materials such as iron ore and steel will continue to fluctuate greatly, and the cost control of enterprises in the industry will face certain pressure.

Second, mining machinery industry barriers analysis

1. Brand barrier

Because the downstream industry, mining, coal and other industries have a certain risk of work, the frequent failure of equipment will have a serious impact on it, so downstream customers have higher requirements for product performance, stability, failure rate and after-sales service, and also formed the characteristics of high customer loyalty in this industry and high willingness to repeat purchases. The brand of mining machinery and equipment can only accumulate a group of high-quality customers with stable cooperation after long-term and repeated market verification.

In order to ensure stable and sustained occupation and expand market share, mining machinery enterprises not only need to have a reliable quality control level and strong batch delivery ability, but also need to constantly improve the technology development and after-sales service system. Because it takes quite a long time to build a good brand image and product reputation in the downstream customer group, it is difficult for new entrants to build a good brand image and market competitiveness in the short term, and there are barriers to entry.

2. Technical barriers

Mining machinery is a technology-intensive product. Due to the differences in equipment application scenarios, material characteristics, environmental protection requirements, construction environment and other factors, the technical department needs to make corresponding design and adjustment according to the needs of customers. The product has the characteristics of multi-disciplinary integration, complex process and high technical requirements. The formation of the above-mentioned technological innovation ability needs to be based on long-term market feedback and their own strong technology research and development ability to continuously break through and improve, equipment enterprises with weak technological innovation ability can not form sustainable product upgrades, it is difficult to meet the changing needs of customers during the continuous cooperation, and it is easy to be at a disadvantage in the long-term market competition. Therefore, there are obvious barriers to technological innovation ability in mining machinery industry.

3, complete production line customized ability barrier

For downstream customers, compared with the production line composed of the complete machine equipment assembled by a number of manufacturers, the complete equipment production line directly provided by mining machinery manufacturers has a more specialized process plan and equipment configuration plan. Complete production lines require the design of a complete set of equipment, so that it can achieve optimal results in environmental protection, safety, energy consumption, cost and output, and bring maximum economic benefits to customers. New entrants often lack the understanding and experience of the downstream industry, and do not have the customization ability of complete production lines, and can not compete directly with enterprises with many years of customization experience. Therefore, there are obvious barriers to the customization of complete production lines in the mining machinery industry.

4. Talent barrier

The talent barrier of mining machinery industry is mainly reflected in the higher requirements for the professional ability and composite background of production personnel, technical research and development personnel, sales personnel and management personnel. Because the production of crushing and screening equipment has the characteristics of refinement, first of all, enterprises are required to have rich machining experience of skilled technicians competent for complex production and processing processes, enterprises need to spend a long time and cost to train production personnel. Secondly, due to the high requirements for end-product customization and diverse product varieties, upstream manufacturers can only stand out in the industry with mature supporting research and development capabilities and rapid design response capabilities, so the innovation ability and professionalism of technical personnel have become one of the core competitiveness of enterprises. At the same time, the sales personnel of the enterprise need to have a deep understanding of the principle and production characteristics of mining machinery and equipment, accurately analyze and seize customer needs, and help customers choose the matching product portfolio and specifications and models, so the formation and training of composite sales talent team has become the top priority of talent management of companies in the industry. Finally, the production, research and development and sales of mining machinery enterprises involve the cooperation and management of various types of work, and it is necessary for enterprises to reserve experienced managers for operation and management. Therefore, there are obvious talent barriers in the mining machinery industry.

5. Financial barriers

Mining machinery industry is a capital-intensive industry. Mining machinery manufacturing enterprises need to invest a lot of money in the early stage to buy CNC machining centers, CNC boring and milling machines and other production equipment with a higher unit price and advanced research and development equipment, while the need to buy or lease a large area of land for daily production and operation. If the new entrants cannot maintain the huge capital investment in the early stage, it is difficult to survive and form competitiveness.

In addition, scale is one of the important characteristics of the heavy machinery industry and a key factor in the sustainable development of enterprises in the industry. In the production of sand aggregate and ore, different types of mining machinery are often needed to meet different functional requirements in the production process. If the economy of scale cannot be achieved, it can not meet the diversified needs of customers, and the enterprise lacks sufficient cash flow to expand the production scale, and the development of the enterprise will fall into a vicious circle. Therefore, capital investment and scale effect constitute an important barrier to enter the industry.