Caterpillar 2013 Annual Report Download - page 48

CATERPILLAR INC. 2013 YEAR IN REVIEW
46
COMMON GROUND
Mining Fundamentals
Remain Positive
A Conversation with Steve Wunning,
Group President
How does Caterpillar manage the cyclical nature of the
mining business?
The mining industry has always been a cyclical one. Caterpillar looks
at the mining industry both from short-term and long-term perspec-
tives. Mining industry production in 2013 was higher than it was in 2012,
and we expect both production and resource consumption to be even
higher in 2014. Commodity prices for coal, copper and iron ore are sta-
bilizing. So, from a short-term point of view, mining production is on the
upswing, which means Caterpillar should eventually see higher mining
equipment sales down the road.
Beyond this current cycle, what’s the long-term outlook for mining?
The long-term fundamentals are very positive. The world’s population
is growing at a rate of about 6.5 million people every month, and that’s
going to continue month in, month out for the foreseeable future. The
standard of living for people in developing countries will almost double
between 2010 and 2018, and by 2035 it’s expected that 60 percent of
the world’s population will live in cities. All of this growth is going to
increase the demand for mining. And remember that the richest, easiest
ore bodies have already been mined. One driver of Cat® mining products
is the amount of material that must be moved in order to get at the
remaining minerals. Declining ore resources and harder-to-get-to ore
bodies are going to really drive the demand for our products, in addition
to increasing consumer demand.
How will autonomous mining change the industry in the coming years?
I talk to mining executives around the world, and, in almost every case,
they want to know about Cat® autonomous mining vehicles. These machines
can help increase their productivity and equipment utilization because
the vehicles operate 24 hours a day, seven days a week. Not only does
autonomous mining offer increased productivity, but customers can also
lower their operating costs because fewer people will be required at the
mine sites. This is a key consideration since many of these mines are
located in remote areas where people need to be transported to and
from the location. There’s also a lot of interest in autonomous machines
because they can actually improve mine safety – putting fewer people
in and around mining operations.
Why does coal continue to be an attractive energy source?
Coal is easy to fi nd, safe to transport, and low in cost. And coal can be
cleaner with the right technology and the right investment. Today, coal
provides about 35 percent of the electricity in the world, and experts
say that the demand for electricity between 2010 and 2040 is going to
increase about 90 percent. These experts also say that coal will meet
about a third of that electricity demand, so, with the right strategy, coal
can have a positive future.
Is it possible for coal to be a sustainable energy source going forward?
Coal and sustainability are not two words frequently used in the same
breath. One aspect of sustainability concerns the environment, of
course, but another concerns improving the living standards of people
around the world. Currently, more than 1 billion people do not have
access to electricity, including more than 50 percent of the population
of Africa. If we can provide energy access for these people, their living
standards will increase and economic development will increase –
creating more jobs, improving education and helping provide a better
way of life. We have to balance our environmental concerns, which are
critically important, with improving living standards and making the
world a better place to live. Coal and other forms of energy need to be
part of that sustainable solution.