* Sees solid growth in mining services, consumables
* Sees benefits from efficiency drive by miners
* Says less negative on outlook, including in mining
By Niklas Pollard and Johannes Hellstrom
STOCKHOLM, May 20 Engineering group Atlas Copco
expects resilient service revenues and efficiency
drives by cost-conscious miners to sustain growth in its mining
and rock drilling business.
The global mining industry is suffering a hangover from a
decade-long boom of rapid expansion and expensive projects with
firms such as BHP Billiton and Rio Tinto now
slashing billions of dollars of spending.
The deep cuts saw Atlas's mining orders fall 26 percent
year-on-year in the first quarter, but in a Reuters interview
Chief Executive Ronnie Leten voiced confidence in the resilience
of the business, which accounts for a third of group sales.
The Belgian with nearly three decades of experience at the
Swedish company said he was aiming for revenues from services
and consumables such as drill bits, which together make up 60
percent of the total at the mining unit, to grow by high
single-digit percentages in the years ahead.
Barring any sharp fall in the overall economy, this should
underpin growth in the mining business, which also includes a
civil works segment for projects such as highway tunnels that
has not seen the downturn evident in mining, Leten said.
"We believe that it will be tough. But on the other hand,
there are spots where we believe that we could extend our
offering, we can get further automation and get deeper into
that," he said.
Atlas Copco, which along with cross-town rival Sandvik
supplies more than half the global market for
underground mining gear, was seeing a gradual positive trend in
consumables, usually a good gauge of underlying demand.
Positive signs in markets such as China and the United
States also left Leten more confident about prospects.
"I'm not as negative and worried as I was in
September/October. And the reason for that is that I believe the
world growth will come," he said.
A drive to boost efficiency in mines after the free-wheeling
boom years should also work in the group's favour as it puts a
premium on equipment usage and the related services needed to
keep gear such as drill rigs running smoothly, Leten said.
"We have profiled ourselves as productivity guys in the
mines," he said at Atlas Copco's headquarters, itself perched
atop an old underground mine on the eastern outskirts of the
Swedish capital where the company still tests its equipment.
"That part is becoming more important because people want to
boost site safety, automation and mechanisation. Automation and
mechanisation - I don't hear anything else."
Atlas Copco's single biggest mining exposure is in gold at
roughly one third of the total, which unlike metals such as
copper and iron ore has only recently run into weak prices with
a fall of almost 20 percent since the start of the year.
"You see that in gold people are hesitating to invest a
bit," Leten said. "Eventually I think it will come anyhow
because the world will need these gold resources. I still see
orders coming in for copper ... I see it still for iron ore and
even for coal."
(Editing by Mark Potter)