Austin Engineering (ASX:ANG) has won more than 100 orders for new truck trays at its Chile business in the first three months of FY25.
Collectively worth circa $35 million, the orders are expected to be delivered before the end of 2024 and represent “significant and potentially ongoing incremental business over the previous year”.
The bulk of the purchase orders for ‘first fit’ trays to OEMs follow on from an initial small production order to check product quality and capability, awarded earlier and announced to the market in March 2024.
Austin reports the orders highlight an improved revenue outlook for Austin’s Chile business unit following a record revenue year in FY24.
“A successful ramp up of production is likely to see further orders placed with the Chile business for delivery towards the end of the current financial year and into FY26,” the company says.
“The increased orders will require Austin to produce up to circa three times the number of trays per month in FY25 from its recent production levels. As a result, Austin has deployed its manufacturing improvement team to Chile to assist in planning the production ramp up.
“The Chile business is already operating at twice the truck tray production rate averaged in FY24 and is expecting to reach the new required production rate by early CY2025. In addition to the OEM orders, expected production levels of Austin’s own brand tray ranges are expected to strengthen alongside continued demand for both new and rebuild mining buckets, including dipper buckets.”
Austin says it is confident these orders represent a new normal in the level of tray production that can be expected in the region in future years and that the contribution of this business unit to group results will become increasingly important.
In FY24, the Chile business had a revenue base of $51.6 million, which included only a minor contribution from the program outlined above.
Austin Chile is also reporting strong growth in its bucket business for new buckets and rebuilds. As previously announced, in dipper buckets alone, Austin’s Chile team expects to have rebuilt more than 22 dipper buckets by the end of 2024 and is currently building a new large dipper bucket for a local customer.
Austin Chile services the copper mines of northern Chile and southern central Peru where demand has been very strong, driven by a rise in global demand for copper, which has traded at strong levels this year.
Chile and Peru are the number one and number two producers of copper globally and Austin’s facility is ideally located to service this region. In FY24, Austin Chile recorded a 26% year-on-year increase in revenue, with strong recurring revenue of 91%. Growth in FY25 is expected to comfortably exceed that level.
At this stage, Austin retains its current FY25 guidance for revenue of circa $350 million and underlying EBIT of circa $50 million.
Chile is the world’s largest copper producer, and the latest figures show a significant improvement in output. The Chilean Copper Commission (Cochilco) forecasts Chile’s copper output to grow 5.5% year-on-year to 5.7Mt in 2025.
A report from Peru’s Ministerio de Comercio Exterior y Turismo on foreign direct investment highlights that with one of the world’s largest silver reserves, the second largest producer of zinc and copper, and a steady pipeline of over 50 projects underway worth $US55 billion, Peru is emerging as one of the world’s most attractive countries for mining investment.
Mining activities are carried out in just 1.36% of Peru’s national territory, leaving “enormous potential” to be explored and utilised.
“The Latin American country is emerging as a key logistics hub for Asia with the opening of the Port of Chancay in November that will significantly reduce shipping times and costs between the Pacific Coast and Australia and Asia,” the report says.
The value of Peruvian exports of goods achieved a record for the third consecutive year, exceeding US$64 billion in 2023, according to statistical information from the Ministry of Foreign Trade and Tourism; 69.5% of foreign currency income to Peru from exports is generated by the Energy and Mines Sector.
Meanwhile, the foreign direct investment report notes Peruvian mining tax incentives include grant guarantees to avoid the modification of tax provisions agreed upon through fiscal stabilisation agreements.
The country is also offering competitive costs, in the form of tax concessions and incentives to attract foreign investment in the mining sector.
In a four-part METS Insight: State of Mining Review series being published over the coming days, Mining.com.au explores some of the important trends from 2024 that are shaping the industry heading into 2025.
Ahead of the International Mining and Resources Conference (IMARC) in Sydney on 29-31 October, part one series covers the whole spectrum of the market – from executives of billion-dollar listed companies to privately held startups trying to get a foothold in the industry.
A Peruvian delegation of 30, including its Prime Minister Gustavo Adrianzén Olaya and the country’s Mining & Energy and Economics Ministers, as well as high level representatives from the public and private sectors, will be in Australia to address IMARC.
Mining.com.au will again be sending a contingent to cover the event.
Write to Adam Orlando at Mining.com.au
Images: Austin Engineering
