Austin Engineering has made another move in its international expansion with the acquisition of the Chile-based steel dump truck body business of Conymet. Austin says “the business is the leading manufacturer and supplier of steel truck bodies in Chile. Based in Antofagasta in Northern Chile, the business is strategically located next to the major copper mines in the region. The acquisition of the business will enable Austin to further realise its international growth plans in a key area of mining activity and potential growth.”

Austin’s Chairman Peter Fitch said “The acquisition of the Conymet steel dump truck body business provides Austin with an excellent opportunity to further expand its international presence through market penetration of the Chilean and wider South American mining and resources markets. It also enables Austin to increase the market base for its market-leading Westech and JEC product ranges and for their operational advantages to be demonstrated and offered to customers in the region.”

Established in 1973, Conymet has long-standing supply arrangements with the major regional miners including Codelco, BHP Billiton, Anglo American, Xstrata and Antofagasta Minerals. The business has its own design and range of truck bodies, which have been used and operated successfully by customers in the region for a number of years.

Fitch said Conymet’s steel dump truck body business was well understood by Austin as its business model, operating structure and client base were very similar to Austin’s existing operations in Australia and the USA. “The requirement for good quality, productivity-enhancing equipment in Chile and the wider South American region is well-known to Austin and the equipment needs of the miners are well within the capabilities of Austin’s existing product range, which is complementary to the products already marketed and manufactured by Conymet. In addition, the market opportunity for Austin is believed to be significant as Chile is one of the world’s lowest-cost, highest-volume producers of copper and the requirements for truck bodies and other equipment within Austin’s product ranges are quite considerable.”

Conymet’s existing management has agreed to stay with the business for a period of time in order to ensure that there is minimal disruption from the change in ownership. The existing employees will be transferred to Austin. The business will be operated under the name of Austin Ingenieros Chile in order to closely align product offerings and operations with Austin’s existing branding and international presence.

Austin lists a number of strategic advantages it sees in the acquisition:

• Expansion into a key market where customers have significant, ongoing, equipment needs and there is low competition
• Relatively low operating costs, enabling higher margins to be generated
• Low operational risk as the business manufactures products similar to Austin, with key input costs such as steel and labour predictable and well-defined
• Blue-chip, quality customer base who want to develop strategic alliances with companies such as Austin in order to better service their needs
• Activity still strong in the region, with major miners progressing with expansion plans
• Introduction of new revenue streams and customers to Austin’s existing businesses and operations
• Business development potential into other countries such as Peru, Colombia and Argentina, which can be serviced by Chile-based operations.

Operations will commence with a defined forward workload, including completion of a number of existing bodies for the previous owners of the Conymet business. New orders have already been received from Codelco for the manufacture of 14 large truck bodies under Austin ownership with orders for a further 20 expected to be secured in the near future from this customer. Austin says “enquiry and tendering levels are currently very high, with orders from other miners and OEM dealers expected over the coming months.

Discussions with a range of clients have confirmed that the introduction of the JEC product range will be well received, Austin reports. The company has already received inquiries in relation to the establishment of strategic alliances for future equipment supplies. To accommodate this demand, the company will fast-track the construction of a new workshop, which is expected to be completed within nine months. JEC’s product range covers almost any and every attachment and truck body application in the mining and earthmoving. Standard and customised designs are catered for from the specific requirements of OEMs to end-users. Westech, based in Casper, Wyoming, is a designer and manufacturer of specialised lightweight truck bodies and services the North and South American mining markets.

Using Austin’s existing knowledge of the South American mining and resources market through Westech’s long-term presence in the region, business development activities are already well underway in order to take advantage of the opportunities that exist in the region.

Austin says that over the past few years, it has made significant efforts in analysing and “understanding the South American market, the nature of mining operations and the requirements of the major miners. In more recent periods, extensive meetings have been held with key customers to explore long-term and expanded business arrangements as a result of Austin establishing a direct manufacturing presence in the region. The capabilities of Austin, together with the operational advantages of its Westech and JEC product ranges, engineering design expertise and international presence, have already been demonstrated successfully to customers. Support for Austin’s presence in the region has already been acknowledged and confirmed by major customers, as evidenced by the award of new contracts.

“The potential availability of attractive Chilean government funding to assist with capital expenditure programs will provide Austin with the opportunity to improve and expand the production equipment and facilities that will be acquired as part of the acquisition. Studies are already underway to determine the cost and logistics of constructing a new 2,500 m² workshop and associated office space for the La Negra facility in order to expand and improve productive throughput, quality and operational performance.

“In relation to the company’s Brazilian joint venture, it is expected that this can be completed over the next four to eight weeks now that the Chilean business has been acquired.”