KOMATSU LTD. Growth strategy and approach to the Latin American market
December 19th, 2023
Senior Executive Officer
President, CE Marketing Division
Yasuji Nishiura
Contents
- Overview of Komatsu Latin American Business
- New technologies deployment in the Latin American region
- ESG initiatives in the Latin American region
2
1- (1) Overview of Komatsu Latin American Business
- Despite the increasing political risks in the Latin American region, supported by abundant mineral resources and robust infrastructure investments, the medium to long-term outlook for mining and construction equipment remains positive. To countermeasure volatile mining equipment demand driven by commodity prices, Komatsu has built a strong aftermarket business to ensure stable revenue.
Politics & Economy | |
(Ind.) | ＜Price trend of major resources＞ |
6.0 | |
*2009 = 1.0 | |
5.0
Chile & Peru account
4.0 | for 1/3 of the world's | |
copper production | ||
3.0 | 2.4 | |||||||||||||
2.0 | ||||||||||||||
1.0 | ||||||||||||||
0.0 | Source: AME Research | |||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Thermal coal | Iron ore | |||||||||||||
Copper | Gold |
＜Politics & Economy : Major countries＞
- Political uncertainty in major Latin American countries, such as Brazil, Mexico, Argentina, Chile, Peru, Colombia, and Bolivia.
- Brazil
Government announced a large-scale infrastructure investment plan of JPY 50 trillion over 5 years (PAC3).
- Mexico
Maintaining a high growth rate due to the robust infrastructure investment (railway construction).
- Argentina
High inflation, high interest rates, and strengthened import regulations.
(Unit) | Latin American Equipment Demand |
50,000
＜Construction Equipment Demand＞
40,000
30,000
20,000
10,000
0
(Unit) | Brazil | LatinAmerica (except Brazil) | ||||
Source：CIMA 7 Construction Equipment | ||||||
1500 | ||||||
＜Mining Equipment Demand＞
1000
500
0
Source：CIMA 7 Construction Equip.+ Komatsu estimation
Sales in the Latin American region
(By destination)
＜Sales by sector＞
Mining sector accounts for 70% to 75% of sales
(MUSD)
＜Sales by segment＞
The aftermarket for the mining sector is a stable source of income
(MUSD)
Sales by destination：
Equipment：Construction, Mining, and Forestry
Aftermarket：Spare parts, service, contract, rental etc.
3
1- (2) Positioning of Komatsu Latin American business
- Komatsu has established a high-profit business model in the Latin American region by directly engaging with mining users through Komatsu owned distributor, facilitating investments, direct contact and contract services.
- The Latin American region has become the second-highestrevenue-generating area for Komatsu after North America on a global basis.
（１）Global and Latin American Demand trend
400,000 | Source：CIMA 7 equipment | |||
Latin America | ||||
(Units) | ||||
300,000
200,000
100,000 | ||||||||||||
7% | 8% | 8% | 8% | 8% | 6% | 5% | 5% | 5% | 6% | 7% 10% 11% | ||
0 | ||||||||||||
FY10 | FY11 | FY12 | FY13 | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | FY20 | FY21 | FY22 |
- Although the Latin American region accounts for approximately 10% of the global demand, the Latin American sales ratio for Komatsu in FY2023 is projected to be 18%.
- Within the Latin American market, the mining business holds a significant share of 70% of the total sales, with a notable portion being aftermarket sales such as parts and services.
（２）Sales of construction equipment by region
Five years span, Komatsu's overall sales increased by 37%, with a notable growth of 90% in the Latin American region.
Japan, 13% | Latin | CIS, 2% | Japan, | Latin |
America, | 10% | America, | ||
Africa, 6% | ||||
CIS, 5% | 13% | 18% | ||
Africa, 5% | Middle East, 3% | |||
FY18 | North | FY23OL | ||
Middle East, 1%JPY2,467Bil America, | China, 2% | JPY3,386Bil | ||
China, 7% | 25% | Oceania, 10% | North | |
America, | ||||
28% | ||||
Oceania, 9% | Asia, 12% | |||
EU, 8% |
Asia, 14% | EU, 9% |
（３）Komatsu sales by segment
70% of the sales in the Latin American region come from the mining sector, including service contracts and parts.
43%
70%
4
1- (3) The history of Komatsu business in Latin America
- Komatsu's first overseas export was to Argentina in 1955. In the 1970s, Komatsu established its first overseas factory in Brazil, marking a long history in the Latin American region. In recent years, Komatsu has expanded its direct distribution business model, primarily focused on mining, which was initially established in Chile, later expanded to Mexico, Peru, Colombia, Panama, and Brazil.
50000 | Latin America demand 7 equipment | The Lehman | 10000 | ||||
(units) | Copper price | Brazil demand | LatinAmerica demand(exp.Brazil) | shock | (USD/t) | ||
(USD/t) | The Argentine | ||||||
The Mexican | NAFTA | Mercosur | The Brazilian | ||||
debt crisis | currency crisis | ||||||
currency crisis | |||||||
0 | 0 | ||||||
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 |
70' | 80' | 90' | 2000' | After 2010 |
DB network | Local Production | DB network org. | Focus on Mining | Fucus on Aftermarket & Finance |
75 Apr. Brazil：Start production Production(w/Sales function)
75 Aug. Mexico：Start production (w/Sales function)
72 Panama：Sales subsidiary | 85 Moved to Miami |
(Latin America except Brazil/Mexico）
Regional sales entity
13 Brazil: Reman center
（09 | Close） | |
05 Chile: Reman center | 11 Chile: Acquisition Dump body company | |
10 Closed Miami office | ||
95 Included Mexico | ||
Chile：Territory South Latin America (15 Included North) | ||
North America：North part of Latin America (15 Closed)
98 Brazil: Sales subsidiary
55 Exported Motor grader to Argentina (Komatsu's first overseas export)
Distributor (DB)
Finance
99 Chile: Established Komatsu owned DB
09 Peru: Partial investment to Peruvian DB
12 Colombia: Komatsu owned mining service provider | 16 Komatsu owned CE/ME DB | |
12 Panama: Komatsu owned mining service provider | 18 Komatsu owned ME DB | |
13 Brazil: Komatsu owned ME DB |
16 Mexico: Komatsu owned DB
14 Chile: Established finance company
16 Brazil: Established finance company
17 Mexico: Established finance company
5
1- (4) Business structure of Komatsu in Latin America
- Central and South America are rich in mineral resources. As part of Komatsu's policy, we directly invest in mining distributors that require large-scale investments.
- For construction equipment distributors, we appoint local distributors. Through Komatsu's key marketing strategy of brand management, we aim to strengthen the relationship with users.
(1) Global Mineral Production Ranking
Large mining equipment is required for the extraction of minerals such as gold, silver, copper, iron, and coal.
(2) Komatsu: Sales & Production bases
Starting with the establishment of Chilean DB in 1999, Komatsu gradually expanded its presence in the mining markets, investing in DBs in a total of five countries. Currently, Komatsu has a total of six DBs
USGS : 2021 | USGS : 2020 | USGS : 2020 | |||||||||
Gold (Ton) | Silver (ton) | Copper (ton) | |||||||||
1 | China | 329 | Mexico | 5,541 | Chile | 5,733,100 | |||||
2 | Russia | 320 | China | 3,378 | Peru | 2,153,952 | |||||
3 | Australia | 315 | Peru | 2,772 | China | 1,723,100 | |||||
4 | Canada | 223 | Chile | 1,576 | Congo | 1,601,600 | |||||
5 | USA | 187 | Russia | 1,380 | USA | 1,200,000 | |||||
6 | Mexico | 120 | Australia | 1,343 | Australia | 885,000 | |||||
7 | Kazakhstan | 116 | Poland | 1,218 | Zambia | 852,700 | |||||
8 | South Africa | 107 | USA | 1,030 | Russia | 811,200 | |||||
9 | uzbekistan | 100 | Bolivia | 930 | Mexico | 732,900 | |||||
10 Peru | 97 | Argentina | 768 | Canada | 584,609 | ||||||
USGS : 2020 | EI : 2022 | ||||||||||
Latin | Iron Ore (K ton) | Coal (K ton) | |||||||||
1 | Australia | 564,519 | 1 | China | 4,560,000 | ||||||
America | |||||||||||
2 | Brazil | 246,791 | 2 | India | 910,872 | ||||||
3 | China | 225,000 | 3 | Indonesia | 687,432 | ||||||
4 | India | 127,000 | 4 | USA | 539,399 | ||||||
5 | Russia | 69,500 | 5 | Australia | 443,425 | ||||||
6 | Ukraine | 49,300 | 6 | Russia | 439,028 | ||||||
7 | Canada | 36,100 | 7 | South Africa | 225,936 | ||||||
13 | Chile | 9,891 | 12 | Colombia | 57,502 | ||||||
14 | Mexico | 9,377 | 24 | Brazil | 7,451 | ||||||
15 | Peru | 8,894 | 25 | Mexico | 5,545 | ||||||
Komatsu
wholly/partially
owned DBs
Production Plant Sales subsidiary Komatsu DB Local DB
1 2 6 21
6
1- (5) Komatsu operation by country: Chile
- Komatsu's distributorship in Chile is the first directly operated distributorship in Central and South America. Large quantity of equipment and personnel are deployed in Chile to support large-scale mining operations.
- A business model has been established to provide direct sales & services to mining customers, resulting in a stable and high absorption ratio over 300%.
（１）Fleet population of Mining equipment in Chile
（２）Concept of Service contract
Model | Units |
Dump truck (Electric/Engine) | 1,100 |
Rope shovel, Drill, Underground | 100 |
Large CE (Bull/Grader etc.) | 350 |
Total | 1,550 |
About 50% of mining equipment are under service contract
w/o Service contract
(Unexpected Repair/Overhaul expenses)
Accumulated
expenses
Rope Shovel
w/ Service contract
(Fixed rate)
Working
hours
・User benefit Stable operation
・Komatsu benefit Stable income
Electric Dump truck
(Load 400tons)
1st | 2nd |
Overhaul | Overhaul |
（３）Reman business
＜Reman＞＝Remanufacturing
Reman center is a refurbishment facility. It delivers warrantied components back to the market contributing to a circular economy. (Main components: engine, transmission, cylinder, etc.).
The same plant is also expanded to Mexico, Colombia, and Brazil.
（４）Number of employees in Chile（５）Absorption ratio in Chile
Personnel to support service contracts | ＝Aftermarket profit / Capacity Cost | |||
Number of employees by country | ||||
Absorption ratio in Chile | ||||
(excluding Japan) | ||||
9,000 employees in Chile
World's No.1
excluding Japan
Stable income & management through contract businesses
OL
7
1- (6) Komatsu operation by country: Brazil
- In the construction equipment market, Komatsu has been utilizing local distributors for operations since the 1970s (currently working with 7 distributors).
- In the mining sector, Komatsu acquired the mining division of a local distributor in Brazil in 2013 & established direct operations, followed by further investment.
（１）Construction sector
The construction equipment market in Brazil has become the world's 4th largest in FY22
【CE demand ranking】 | 【Feature of Brazilian market】 |
（２）Mining sector
To strengthen the relationship with major mining users, Komatsu is actively promoting investment and enhancing its operational bases.
Rank Country | FY22 | vs FY17 | |
(TTL＝100) | (Multiple) | ||
1 | China | 25.4 | 0.8 |
2 | USA | 15.8 | 1.4 |
3 | Japan | 6.6 | 1.0 |
4 | Brazil | 5.0 | 4.3 |
5 | Indonesia | 4.7 | 2.1 |
- | Others | 42.5 | 1.4 |
Total | 100.0 | 1.2 |
- With its vast territory and abundant mining resources, infrastructure development, agriculture, and forestry.
- The country has numerous domestic preferential policies, and local production is prioritized.
- Komatsu, with its 7 distributors, covers the entire country.
- In 2016, Komatsu established its own finance company.
【Approach to the Mining sector】
North (Parauapebas)
Current repair center (large comp.)
Iron ore Copper Nickel Bauxite
Source：CIMA 4 models
KDB SUZANO PLANT
New facility：2024～
South (Belo Horizonte)
Current office & repair center
- Komatsu started production at its first overseas factory in 1975.
- Production approximately 3,000 units of 34 different models per year, not only for the domestic market in Brazil but also for North America, Europe, and countries in Central and South America.
Sao Paulo
Current reman center
New facility：2025～
8
2- (1) New technologies deployment in the Latin American region: Autonomous trucks
- In 2005, Komatsu introduced the world's first Autonomous Haulage System (AHS), an unmanned dump truck, in Chile, leveraging its extensive experience in mining equipment support.
- Building upon the AHS implementation in Chile, Komatsu has been expanding its deployment to other regions such as Australia and Canada.
- In South America, AHS has been implemented in a total of 9 sites, with over 100 trucks in operation.
AHS implementation history
9
2- (2) New technologies deployment in the Latin American region: D375 teleoperation
From May 2023, commercial operation of large-scale ICT bulldozer remote control began at Anglo American's Minas-Rio iron ore mine in Brazil. Together with our customers, Komatsu is creating a safe, productive, smart, and clean future site.
【Female operator performing remote operations】
Comfortable control room with no vibration located
2.5 km away from the operating site
【Feature of Komatsu teleoperation Bulldozer】
Blade automatic control | with | Machine guidance system | |
＋ | 「 | Provision | |
technology for ICT | 」 |
bulldozers
Even without skilled operators, easily operate from remote locations, significantly improving safety and comfort during operation
【Teleoperated bulldozer during remote operation】
D375 teleoperated bulldozer operating at a mining site (stockpile)
Teleoperation
D375Ai-8
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Komatsu Ltd. published this content on 19 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 December 2023 12:57:09 UTC.
