Bloomberg News

Caterpillar Says Demand From U.S. Coal-Mining Industry Slows

June 06, 2012

Caterpillar Inc. (CAT:US), the world’s largest maker of construction and mining equipment, said demand from the U.S. coal-mining industry is slowing after a mild winter.

Global demand for the company’s machinery is still at a “very, very high level,” Steve Wunning, Peoria, Illinois-based Caterpillar’s group president for resource industries, said today in a telephone interview from Zhengzhou, China. “The only area we’re seeing a bit of a slowdown is in U.S. coal.”

U.S. demand for coal in electricity generation will drop 9.7 percent this year to the lowest level since 1984, according to the U.S. Energy Department. Some power plants have switched to using natural gas after surging output from hydraulic fracturing of shale rock sent prices to the lowest in a decade.

“Global demand for our equipment will offset any slowdown in the U.S. as it relates to mining,” Wunning said.

Caterpillar completed its tender offer to buy Hong Kong- based ERA Mining Machinery Ltd. (8043), a coal-mining equipment maker, for as much as HK$5.69 billion ($733 million) to gain sales in China, the world’s largest producer and user of coal, the company said in a statement today.

The bid was approved by investors holding 99 percent of ERA’s shares and Caterpillar plans to complete the acquisition of the remaining shares of ERA common stock in the third quarter of 2012, the company said today.

“We don’t see as much growth in the U.S. in coal as we do in other regions like China and like India,” Wunning said. “The longer-term growth in the U.S. is questionable because the government is not permitting many new coal mine operations and not permitting coal-fired power plants.”

Caterpillar rose (CAT:US) 3.6 percent to $86.66 at the close in New York.

To contact the reporter on this story: Michelle Yun at myun11@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net


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Companies Mentioned

  • CAT
    (Caterpillar Inc)
    • $103.38 USD
    • -1.31
    • -1.27%
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