Mining tire industry to ramp up production

AKRON, Ohio — The North American mining industry is rebounding, with demand for coal and construction metals on the upswing.

Both surface and underground mining in North America experienced a healthy rebound in 2021, with some headroom to return to pre-pandemic levels, according to Sarah Robinson, B2B mining business segment marketing manager for Michelin North America Inc.

"While mining production indexes continue to improve, the industry has not reached pre-pandemic levels due to headwinds in labor, parts, shipping and equipment," said Rob Seibert, president of off-the-road tires at Bridgestone Americas Inc.

"However, we expect that the stimulus of the infrastructure package will help support copper, iron ore and other mined material in order to supply the critical raw materials needed for investments in EV, green energy, utilities, roads, bridges and other policies. Today, we are seeing strong commodity demand that is in turn impacting pricing. We expect the industry will continue to ramp up production as a result of increased demand, which will positively impact the mining tire market outlook in 2022," Seibert said.

"As for North American mining in 2021, it was an interesting year because things started off slowly with coal mining down, but more recently there's been an uptick driven by an over-estimation on the availability of alternative energy for power generation. Coal still has a major role to play in that market and demand spiked significantly this past year," said Paul Hawkins, senior vice president, aftermarket sales, North America for Titan International Inc.

After declining in 2020, the combined production of U.S. fossil fuels (including natural gas, crude oil and coal) increased by 2% in 2021, according to the U.S. Energy Information Administration (EIA), which expects U.S. fossil fuel production to continue rising in both 2022 and 2023, surpassing production in 2019, to reach a new record in 2023.

Of the total U.S. fossil fuel production in 2021, dry natural gas accounted for the largest share at 46%, crude oil accounted for 30%, coal for 15% and natural gas plant liquids (NGPLs) for 9%.

U.S. dry natural gas production increased by 2% in 2021, and the EIA expects production to increase 3% in 2022 and 2% in 2023.

U.S. crude oil production dropped by an estimated 1% in 2021, but EIA expects it to increase by 6% in 2022 and 5% in 2023.

"We forecast that, in 2022 and 2023, crude oil prices will remain high enough to encourage growth in the number of active drilling rigs and continued improvement in drilling efficiency," the EIA said.

Seibert said he expects strong recovery and demand among traditional commodities, including copper, iron ore and other mined material that will help support the policies within the infrastructure bill.

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U.S. coal production increased 8% in 2021, driven by increased demand due to rising natural gas prices. Coal's comparatively lower prices made it more economical for use in electric power generation compared with natural gas, according to the EIA.

In 2020, U.S. coal production fell to its lowest level since 1964. "We forecast that coal production will increase 6% in 2022 as coal-fired electricity generators rebuild inventory levels. However, we forecast that coal production will only increase by 1% in 2023 as demand for coal in the electric power sector declines," the EIA said.

"Much of the decrease in coal mine capacity that occurred in 2020 appears to be permanent. Coal producers have experienced labor and capital shortages, which we expect will continue to limit supply in the forecast. Despite these limitations, we forecast more coal production in 2022 and 2023 than in 2021 as utilization at existing mines rises."

Since coal is an essential component of the steel-making process, the EIA predicts demand for coal to make steel will increase 16% in 2022 and by 3% in 2023, particularly for infrastructure-related materials.

"Coal mining is the clear hot spot right now," Hawkins said. "We're well-positioned with our wheel servicing facility in Gillette, Wyo., where coal activity is booming. We're also positioned in Elko, Nev., to serve the gold mining sector, which remains strong thanks to high gold prices. Up north (in Canada), the Tar Sands are also going strong due to the price of oil."

"With the bounce back of coal mining, we're expecting a solid year for mining wheels and tires," Hawkins said, noting that 57-inch wheels are among the most in-demand sizes in mining.

"Mining is primarily driven by the demand for and pricing of commodities. Right now, coal demand and pricing are the main factors affecting this market," Hawkins said.

The mining tire industry continues to deal with pandemic-related challenges such as labor shortages and supply chain disruptions.

"However, growing confidence and economic growth have created an interesting moment for the mining tire market," Seibert said. "We have seen positive momentum in a wide range of the mining sector's portfolio to increase total demand. Additionally, we continue to see investments in electrification, which is expected to result in an estimated 200,000 tons of copper to meet demand and will have positive impacts on the mining sector."

He said last year Bridgestone completely refreshed its mining haulage line by using new technologies to increase payload and speed.

"Every day, we're making mining more efficient with solutions such as iTrack II, partnering with customers on autonomous programs and even operating a global monitoring facility. Our focus is to rapidly develop additional best-in-class integrated technology solutions as the industry evolves," he said.

Balkrishna Industries Ltd. (BKT) enjoyed a strong year in the OTR replacement market with more than 20% growth, according to Chris Rhoades, assistant vice president of BKT USA Inc. The Indian tire maker introduced several products last year and recently unveiled a 57-inch mining tire.

Rhoades said demand has exceeded supply in the mining tire market and that presents a great opportunity for smaller players, such as BKT, to grab market share.

"Maybe where we would have to work to get some accounts and to earn that business, they're calling us now due to product availability," he said.

Rhoades said BKT expects sales to grow another 35% this year.

"Everything looks hot. I think a lot of the supply-chain issues that we experienced last year as the ports backed up with shipping lines and everything, probably for the most part that logistics part has cleared up, although freight costs are still high as far as availability of containers. So it's not 100% back to where it was pre-COVID but a lot of the logjams are cleared out. …

"We are continuing to sign up new dealers in the market in different areas, and existing ones are growing even stronger with us."

With fill-rate issues continuing into 2022, the tire makers encouraged tire dealers to stay on top of their inventory needs.

"Keep a close pulse check on the end users, in order to send demand signals as early as possible. Though Michelin Mining is actively managing the logistics and supply landscape, any extension of foresight helps to smooth the system. Like any stoppage in traffic, often the best way to improve the flow is to look ahead and avoid abrupt inputs," Robinson said.

BKT's Rhoades advised dealers to "know your customers, know their needs better than they do. Absolutely keep track of their tire inventory and their tire performance so that, as a dealer, you can then order from your manufacturer partner to make sure you have tires on order and they arrive in time for the customers' needs so you don't have to scramble."

"As always, you must change with the changing dynamic of the market," Titan's Hawkins said. "Stay close to your customers and listen to them. Be willing to change when the market changes — nobody could have predicted that coal would change so dramatically this year without listening to their mining customers."

Bridgestone's Seibert said mining customers are looking for additional integrated solutions across their operations.

"Large quarry customers, for example, continue to grow their footprint through M&As, consolidating the customer base and changing their expectations. With growth comes more machines, more people and, ultimately, more opportunity to drive productivity and efficiency gains. I would encourage mining tire dealers to continue looking for the latest available solutions to support their growth and create value together through data, technology and service," he said.