Epiroc split from Atlas Copco in 2017, could you introduce the role of the Turkey office and your main service offering?
Atlas Copco has one of the longest histories of any international company in Turkey, having been in the country since the 1950s. We used to have a manufacturing plant in Tuzla before the customs agreement with the European Union but now there is no manufacturing and we focus on services. As of April 2018, from Istanbul we cover eighteen countries: Turkey, Georgia, Azerbaijan, Iran, United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Oman, Bahrain, Egypt, Afghanistan, Iraq, Syria, Pakistan, Lebanon, Jordan, Yemen. We have another hub office in Dubai and some employees in Saudi Arabia and Oman.
There are many mining equipment providers in Turkey, what is Epiroc’s competitive edge?
We have had a separate entity in Turkey for a long time, whereas most of the other international players rely on country distributors. Atlas Copco has always worked to build its own customer centers worldwide where there are enough potential and legal obligations. There are of course smaller local manufacturers, and competition is changing depending on the application. For some applications the competition is wide but for others it is still very limited. For products likes tunneling machines, blasting machines or underground transport, our premium products, there are not local players so we face only competition from bigger international manufacturers for these.
Turkey has a strong manufacturing base. For what applications is Turkey particularly strong for mining manufacturing equipment?
It depends on the technical needs; if it is not too complex, it is very easy to do local manufacturing in Turkey. Companies here are good at water well drilling, dimension stone applications and hydraulic breakers. Therefore, Epiroc focuses on premium markets and we are aiming to make some local acquisitions.
Turkey is still relatively new to mining but there are a lot of reserves and after the privatization drive the industry grew rapidly. However, we still do not have a high enough level of exploration and there are social and environmental problems which means it is difficult to get permits. We know there are a lot of gold reserves, with some still waiting for permits. Additionally, we are waiting to see what happens with the licenses held by Koza Gold, the biggest gold producer, after they have been taken over by the government. Nevertheless, the gold sector is an area we are targeting, as their level of investment matches with our premium products. Moreover, we are targeting all minerals, except coal. We work with the big producers in Turkey. We also sell drill rig consumables to drilling companies, but most exploration contractors also manufacture drill rights in Turkey.
Atlas Copco acquired a 34% stake in Mobilaris in 2017 and has invested heavily in automation. Is the market ready for this in Turkey and how can it help with safety?
Some of the big producers in Turkey are now looking at automation, for example Koza Gold has asked for machines to have more automation features. Generally, however, the market is not at that level in Turkey. It will come but it will take time for mining companies to use more automation services. This is partly due to there not being so many international mining companies in Turkey. Our rigs now have digital features so that we can monitor them worldwide and we are hiring data engineers to help provide more services to customers. We have pilot data hubs and we are investing in this area in Turkey.
Typically, when using automation services, it limits the number of people underground as operations can be managed remotely. This will have a big impact on the number of accidents. The market is moving this way, and we can now control a machine from anywhere remotely.
What will be the highlights for Epiroc in this region going forward?
We have very high growth targets organically and inorganically. Epiroc has a new CEO as of April 2018. Also, it will be listed as a public company at the beginning of June 2018 and then there will be the final split with Atlas Copco.