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Caterpillar Lauches $5B Global Mining Plan After Bucyrus Deal

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Caterpillar Inc., Peoria, Ill., has announced a $5-billion investment in a new global mining initiative, less than two months since the equipment maker finalized on July 8 its acquisition of Bucyrus International, South Milwaukee, Wis., in a deal valued at $8.8 billion.

Historically known for its construction equipment, Bucyrus in recent decades did most of its business in the mining sector, building draglines, excavators, giant trucks and continuous miners. Caterpillar already offers a selection of surface mining equipment, and company officials say the acquisition of Bucyrus now allows Cat to offer a broad array of machines for both surface and underground mining.

However, the $5-billion mining investment goes beyond the Bucyrus integration. “That $5 billion is in two areas,” says Steve Wunning, Caterpillar group president. “One is in developing new products: electric-drive trucks, [fully autonomous equipment] and developing products for the lesser-regulated developing markets. We are also going to be significantly increasing the capacity of our factories for mining, a roughly 70% to 80% increase in capacity compared to what we produce today.”

The integration of Bucyrus equipment into the Cat lineup will go much further than painting the white machines yellow, says Rod Bolhous, a former vice president of Bucyrus who now is overseeing the manufacturing at Caterpillar’s Milwaukee campus. “We came to the decision that we had to go Caterpillar from day one.”  Engines in Bucyrus equipment made by Cummins or other manufactures will be replaced with Caterpillar-made engines, and many smaller components, such as hoses, will be replaced with Caterpillar-made versions, too. The former Bucyrus headquarters in Milwuakee will serve as the new Caterpillar Global Mining Division headquarters.

While the new mining strategy is considered global, there are specific international markets Caterpillar is hoping to penetrate. The world's largest equipment maker enjoys a fair share of the U.S. mining market but faces stiff competition in China, Russia and India, markets seen as growth areas as mining technology and methods improve in the regions.

In a statement released on Aug. 24, Caterpillar announced an agreement with the Xitong Technical Industrial Park Administrative Committee to build a proving ground and large wheel-loader manufacturing facility in Tongzhou, Jiangsu Province, China.

The new model wheel loader is being developed at Caterpillar’s Wuxi Research and Development Center and will be targeted at China and other developing markets. Both facilities are expected to be on line in the second half of 2012.

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