WesTrac to acquire Cat’s north east Chinese businesses

WesTrac China has announced it will acquire Caterpillar Global Mining’s distribution and support businesses in Chinese provinces where WesTrac already operates.

The acquisition of the former Bucyrus businesses, worth approximately USD$130 million, will see WesTrac begin providing sales services and support for expanded mining products in these regions.

According to WesTrac the acquisition willgenerate between USD $210 and $250 million for the 2015 financialial year.

Following completion of the acquisition WesTrac will increase staff levels by 80, including 37 Cat employees and contractors in China.

It comes as WestTrac announced it wouldslash around 60 apprentice roles across its Australian operations in November, following a 350 person job cut in June.

Earlier this year WesTrac also named a new head of business,Jarvas Croome, the current chair of Woodside, as a replacement for outgoing CEO Jim Walker.

WesTrac holding company Seven Group’s CEO Don Voelte stated “we are pleased to be building on and extending the partnership with Caterpillar; the acquisition of the expanded mining product distribution and support business in our north east China markets will enhance our plans for development in the supply and service of heavy equipment to the mining and construction sectors”.

“The former Bucyrus product line and large installed base are a logical addition to our current range of Caterpillar products, and will provide us with significant opportunities for future growth with our mining customers.

“As underground mining accounts for more than 80% of all coal production in China, the acquisition of this business will significantly increase the opportunities for WesTrac’s future growth in China.”

Caterpillar acquired the Chinese businesses during its massive $8 billion merger with Bucyrus in 2010.

Since 2011 Cat has looked at expanding its operations in the country, acquiring Chinese businesses and opening new facilities.

However it has not all be smooth sailing, with Cat uncovering misconduct in one of the Chinese businesses following its own investigations.

The mining machinery manufacturer stated that it “has uncovered deliberate, multi-year, co-ordinated accounting misconduct concealed” at the recently acquired ERA Mining Machinery company’s subsidiary Zhengzhou Siwei Mechanical & Electrical Manufacturing, in China.

“Caterpillar’s investigation determined several Siwei senior managers engaged in deliberate misconduct beginning several years prior to Caterpillar’s acquisition of Siwei,” it said.

It went on to stress that “the misconduct at issue commenced at Siwei well in advance of Caterpillar’s acquisition. We believe it was perpetrated without the knowledge of any Caterpillar employee who did not come over to Caterpillar as part of the Siwei acquisition”.

Following the investigation Cat removed several senior managers at the company, installing its own new leadership team, with a longterm plan to continue working in China.

This investigation and its outcomes, however, is unlikely to affect WesTrac’s operations in the nation.

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