Caterpiller equipment.Photo supplied Caterpiller equipment.Photo supplied
Roy Cokayne
Caterpillar would consider establishing a manufacturing presence in Africa “at some point” for its general construction equipment, the largest maker of construction and mining equipment said on Friday.
Doug Oberhelman, the chairman and chief executive of US-based Caterpillar, confirmed this on Friday but stressed it would only happen when Africa needed a critical mass in general construction equipment and when it could achieve faster growth in the energy or construction sectors.
“I would say it would not happen in 2012 or 2013 but it’s coming in our future,” he said in a presentation at Barloworld’s head office in Johannesburg.
Caterpillar’s products are distributed in southern Africa and some other territories by JSE-listed Barloworld.
Oberhelman said that Barloworld planned to drive substantial growth of Caterpillar in Angola and Mozambique, among other territories.
Apart from southern Africa, Barloworld is also the distributor for Caterpillar earthmoving equipment and power systems for Spain, Portugal and parts of Russia. Caterpillar’s acquisition of Bucyrus International last year for $8.6 billion (R69bn), the largest acquisition in the firm’s history, also gives Barloworld access and an opportunity to distribute Bucyrus mining products in these regions.
Oberhelman foresees the strong demand for minerals and commodities continuing and predicts that the big three commodities in 2040 will still be oil, gas and coal.
His forecast is based on governments seeking to raise living standards. As this happens, it would drive the need for energy, power, infrastructure, roads and bridges.
Oberhelman said this had driven the acquisitions Caterpillar made in Bucyrus, MWM and Electro-Motive Diesel to take advantage of opportunities in mining, rail and electric power which he believed should do great things for the company’s shareholders.
He believed there was a risk to private sector investment in mining from governments across the developed and developing world that increasingly wanted a larger share of the benefits from higher commodity prices in the form of increased royalties and taxes.
But Oberhelman said this risk was dependent on the pricing level of commodities.
“What we are seeing with sovereign governments is that as oil has surpassed $100 a barrel and copper prices are as high as they have been, governments and their people look at it as their resource and their asset and they want a piece of it,” he said.
Oberhelman said this was happening in the US with oil and gas with a “hue and cry” to tax these commodities more to better benefit public coffers.
“I think this is going to be a growing trend. Countries are stressed by their fiscal situation and they need revenue so it’s a natural place for them to look,” he said
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Barloworld shares fell 1.52 percent to close at R97.50 on Friday.