16/05/2012 - 13:32

GE makes $700m move into mining services

16/05/2012 - 13:32

Bookmark

Save articles for future reference.
GE makes $700m move into mining services

US giant General Electric (GE) aims to increase its presence in the resources sector through friendly takeovers of two mining equipment businesses, ASX-listed Industrea and US-based Fairchild International.

Industrea shares jumped sharply after news of the $700 million takeover launch broke and were up 37 cents, or more than 43 per cent, at $1.23 at 1450 AEST.

"It is our first foray into mining equipment purely for miners and what these two companies do is start to build out our product portfolio," GE Australia and New Zealand president Steve Sargent said.

"GE plays well in industries where we can leverage our global distribution and our global supply chain capabilities."

Both deals would widen GE's product offering to about 35 per cent of the underground mining value chain, it said.

GE will now provide equipment to mining majors BHP Billiton, Rio Tinto, Fortescue Metals and others.

Industrea is headquartered in Brisbane and has a strong presence in China, employs 700 people and has four divisions. They are mining equipment, mining technology, gas management and mining services.

Fairchild is a smaller privately-owned business with 150 employees; the purchase price was not disclosed.

Both companies will become part of GE Transportation’s global mining business.

Mr Sargent said the move on Industrea was strategic, allowing it to tap into the $US61 billion ($A61.56 billion) global mining equipment industry and exposing it to the upside for further growth in mining in Asia.

GE forecasts growth of eight per cent a year in the global mining equipment industry up to 2020.

GE already provides power generation for resources companies.

Its Oil & Gas business also has a strong presence in Australia, with contracts on the multi-billion dollar liquefied natural gas (LNG) projects being built.

Overall, GE posted Australian revenue of $2.9 billion in 2011, a 67 per cent hike on 2010.

Double-digit growth is forecast this year.

Mr Sargent said that despite recent negative press about growth in China slowing, the desire of developing countries to urbanise was an "unstoppable trend" and Australia's energy, LNG, iron ore, coal and copper would stay in demand.

The purchase of Industrea is subject to shareholder approval.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options