The Swedish original equipment manufacturer expects the JV to be formalised in six months after receiving regulatory approvals and to be operational in late 2011.

Shandong, named after the Chinese province it is based in, already manufactures its own underground coal mining equipment and is a subsidiary of the Xinwen Mining group – one of China’s top 15 coal mining companies.

“The joint venture will focus on sourcing, assembly, sales and service of roadheaders for the large Chinese coal mining market,” Sandvik said.

“Sandvik will contribute with the product know-how and technology while Shandong Energy Machinery will contribute with local sourcing skills and customer application knowledge.”

These roadheaders will be sold under the Sandvik brand and the JV aims to be the top seller of “premium” roadheaders in China.

“This joint venture agreement is in line with Sandvik’s long-term strategy of continued profitable growth and our aim to become a leading equipment supplier to the Chinese coal mining market,” Sandvik Mining and Construction president Lars Josefsson said.

“It gives us a great opportunity to further develop our well proven underground coal mining equipment in close cooperation with our Chinese customers, as well as expanding our local set up to provide the best service and support to our customers.”

Shandong has 4400 employees.