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Tyre shortage slowing miner's expansion

LIMITED supplies of truck tyres have slowed the expansion of Indonesia's largest coal exporter, PT Bumi Resources.

Staff Reporter
Tyre shortage slowing miner's expansion

Responding to China's voracious demand for the fuel, the producer had planned to increase output by 20% per year through to 2012.

PT Bumi director Ari Saptari Hudaya said he had the coal and the market was there, but there was one big problem. "We have the trucks but no tyres," he told local media.

And PT Bumi is not alone. The Australian newspaper said miners worldwide, including Rio Tinto, faced shortages of the giant tyres as mine expansions outstripped supply from Bridgestone and other manufacturers.

With minerals output slowed, the lack of truck tyres (which cost up to $A47,000) has contributed to record prices for iron ore, according to investors.

"It will potentially mean delays for expansions, and even for current producing assets it may mean production levels are somewhat lower," Ausbil Dexia fund manager Adam Dixon told the paper.

"You obviously need big trucks to move ore and if you don't have tyres for the trucks, they're not going anywhere."

China's demand for steel pushed contract prices of iron ore up by a record 72% this year.

BHP Billiton, the world's biggest miner, Rio Tinto, and Anglo American plan to spend a combined $US20.9 billion ($A28.13 billion) in the next three years to expand and build mines as China's economic growth increases demand for copper, steel and coal.

The tyres used on the trucks, which weigh up to 400 tonnes, wear out in as little as six months.

EnergyReview.net

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