"Serious" tire shortage looming: Caterpillar

By Julie Gordon

SANTIAGO (Reuters) – The mining industry could face a serious shortage of tires by the end of this year and that could lead to delays at a time when demand for mining equipment is booming, the head of Caterpillar’s (CAT.N: Quote, Profile, Research) global mining division said on Thursday.

The shortage could be similar to the mid-2000s, when the heavy equipment maker was caught off-guard as demand doubled for the giant tires used in mining trucks, increasing costs for miners and delaying production.

“By the end of this year, or early next year, we will be in a potentially serious tire shortage situation,” said Cat Global Mining President Chris Curfman in an interview with Reuters during the CRU copper conference in Santiago.

“There is a lot of truck demand, a lot of big tractor demand,” he said. “Lead times are stretching out now and we are seeing some supply chain issues.”

Mining trucks and tractors require giant tires, some as big as 16 feet in diameter, which cost tens of thousands of dollars and need to be replaced throughout a vehicle’s lifetime.

While Curfman is “concerned” about the tire shortage, he said the company has developed closer ties with its suppliers and is better prepared to deal with a crunch this time around.

INDUSTRY ON FIRE

But the supply crunch isn’t limited to tires.

“The whole mining industry is really on fire,” said Curfman. “We’re seeing a back-up in availability on some products going out eight to 12 months.”

While this could lead to delays, the positive for Caterpillar is that it is selling more trucks, tractors and other heavy equipment to miners all around the world.

“We’re delivering record numbers of mining products, predominantly outside the U.S.,” Curfman said. He added that most equipment was going to emerging markets like China, India and Russia, as well as to top Latin American markets Chile, Peru and Brazil.

“Latin America is just booming and we’re seeing just a huge increase in new mines,” said Curfman. “New greenfield mines going in are probably at a record level, so (we see) very good growth curves going forward.”

And while Curfman expects some hiccups in the current mining boom cycle, he doesn’t see a real slowdown happening anytime soon. He added that Caterpillar is working to bring new products to market to help miners deal with rising costs.

“We’re taking a longer-term view of this growth cycle with our capacity,” he said. “We’re expanding. We’ll be able to meet the capacity requirements going forward.”

(Reporting by Julie Gordon; Editing by Simon Gardner, David Gregorio and Lisa Shumaker)

"Serious" tire shortage looming: Caterpillar