SERVICES & SOLUTIONS
TBY talks to Brian Doffing, General Manager of Atlas Copco Peru, on the development of the mining sector and how the demand for machinery has evolved into a service-driven model.
BIOGRAPHY
Brian Doffing is a mechanical engineer with a MBA who has worked with Atlas Copco for the past 20 years. He has experience in manufacturing, supply chain, and product management. He was previously based in Asia, managing regional surface mine operations in Singapore, Indonesia, Australia, India, and China. He has been based in Peru for three years as the managing director and general manager of Atlas Copco Peru’s mining business.How would you describe the evolution of the mining sector in Peru over the last few years, and how has it impacted your operations?
As commodity prices have gone down, smaller mines have had to shut down or limit their production. There have also been fewer large-scale investments in the sector. Copper prices were the last to slow down. The smaller mines have generally opted to cut costs by choosing cheaper products, which are also less reliable, of our competitors, but the larger mining houses like Southern, Freeport, Barrick, Glencore, BHP, and Newmont all stay with traditional suppliers like us because they do bulk mining and are large operations. The cost for them to stop is tremendous so they stay close to the OEMs. The landscape has changed. When Atlas Copco Peruana started, we were selling some pneumatic handheld equipment and some basic compressors. Now, we are partners with our clients, and we do not just sell them equipment; we sell them services and solutions.
How has the competition in this market evolved over the years?
In surface mining, we compete with Caterpillar, while in underground mining we compete with Caterpillar and Sandvik. Over the last 15 to 20 years, there has also been an increase in Korean and Chinese companies entering the market and these companies have been able to replicate existing technologies at a much lower cost but not at the same quality versus value levels. Besides that, there are also some local producers whom we compete with in Peru, since Peru is a mature mining market.
What role does innovation and technology transfer play in Atlas Copco's operations in Peru?
We have always looked at how we can use technology to make mining more efficient. We work to introduce new technologies and showcase what technology and innovation can mean to our clients' operations. This is more than just about providing equipment. We are helping shape a framework in which the technologies can be implemented and applied into their operations. Looking at Peru overall, the country utilizes traditional mining methods, and technological advances have been slow to catch on during the mining boom. The majority of advances have been mostly in surface mining, where the multinationals are the most active, as they have the operations of scale. This is also where a lot of the technology transfer happens. Typically in countries where labor costs are nominal, companies tend to not pay too much attention to automation, but we can show that it is not just a matter of the cost of implementing and operating it, and also training the people to use it; it is a matter of achieving consistency and repeatability in production.
How does Atlas Copco find a synergy between economic growth and environmental stewardship?
In terms of sustainability, we do remanufacturing, whereby we take components from old products and overhaul them to a like new state equivalent to new components. Hence, we can both save on scrapping and also sell our products at a lower cost to our customers. That also means we produce less waste, there are fewer wasted resources, and fewer emissions.
What are your targets and expectations for 2016?
In 2016, we do not expect any uptakes in investment capital. In the medium term, we expect growth. As commodities have been depressed and supplies have gone down, the demand will eventually outstrip it, so it is just a matter of when it will happen. Over 10 years we expect 7-10% growth. To this end, we are making the necessary investment, investing in training, in our consumable business, and in service support. Consumables and service support will be the two bookends for us in 2016. We will continue to focus on technology, bringing in machines that are brand new for this market.
SERVICES & SOLUTIONS
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