Metso is strengthening its presence in the fast growing Chinese construction market through two strategic actions: Establishing a joint venture with LiuGong Group Corp. Ltd and acquiring 75% ownership of Shaorui Heavy Industries Ltd. Metso continuously strives to better serve the needs of Chinese customers and to support the sustainable development of China's industries and infrastructure.
Joint venture with LiuGong Group Corp. Ltd
Metso and LiuGong Group Corp. Ltd (LiuGong) will form a 50%-50% joint venture to develop the track-mounted crushing and screening business in China. The joint venture will combine Metso's know-how in track-mounted crushing and screening business and technology with LiuGong's extensive distribution resources (~900 outlets) and manufacturing capabilities in China. The initial scope of the joint venture will cover the design and manufacture of localized versions of Metso's Lokotrack 1000 Series mobile crushers and screens; the range may be further expanded in the future. The products will be sold under dual branding: Metso LiuGong. The joint venture company will also promote Metso's global track-mounted crushing and screening equipment in China.
The joint venture enables the capture of a significant market share of the fast growing mobile crushing and screening market in China. The value of the investment made in the new company will not be disclosed. The deal will have no effect on Metso's existing distributor network in other parts of the world. The transaction is subject to the relevant regulatory approvals, which are expected in the next six months.
Acquisition of Shaorui Heavy Industries
Metso will acquire 75% of Shaorui Heavy Industries Ltd. (Shaorui), which is one of the leading mid-market crushing and screening equipment producers in China. Metso has an option to purchase the remaining 25% of the company in the future. The acquisition enables access to the Chinese mid-market and customers. Furthermore, it forms a good platform for future growth in terms of the leading crushing and screening market position by combining Metso's current premium product offering with Shaorui's excellence in mid-market products. The technological know-how of both companies will be used to further enhance our product offering in China. In addition, after the acquisition, Metso will have a better product portfolio for penetrating new markets in Asia and Africa.
Shaorui's 18 sales and services centers and a strategically located manufacturing facility in southern China complement Metso's manufacturing unit in Tianjin. The value of the acquisition will not be disclosed. The transaction is subject to the relevant regulatory approvals, which are expected in the next few months.
"China is a very important market for us, and we want to be part of the future development of the fast growing construction market. The joint venture with LiuGong offers us an opportunity to enter the crushing and screening mobile equipment market in China together with a well-known partner. By acquiring 75% of Shaorui, we will gain deeper knowledge about the mid-market customers and products that will benefit us in many ways. In the longer term, both of these investments will naturally grow the installed base of Metso crushers in China providing future service potential," says Andrew Benko, President, Mining and Construction, Metso.
Metso in China
The Chinese construction equipment market is estimated to reach USD 100 billion by 2016, driven by urbanization and infrastructure development, and offers great growth opportunities for Metso.