Caterpillar Inc.
CAT
recently entered into a collaboration agreement with Nouveau Monde Graphite Inc. to develop, test and produce zero-emission machines for the latter’s Matawinie graphite mine. Caterpillar expects to become the exclusive supplier of an all-electric mining fleet for the mine by 2028. The Matawinie project, which will provide high-purity graphite concentrate for electric vehicles, is planned to be the first open pit operation in the world that will exclusively use electric equipment. This is an important milestone in the mining industry as it can be used as a launch pad for other miners focused on cutting down their emissions utilizing Caterpillar’s cutting-edge technologies.
Fully owned by Nouveau Monde, Matawinie is a high-purity flake graphite deposit located in Saint-Michel-des-Saints, 150 km north of Montréal, Québec. The project is estimated to contain probable reserves of 59.8 Mt (million tons) grading 4.35% graphitic carbon. The mine is expected to produce 100,000 tons of graphite concentrate annually for the battery electric vehicle and energy storage markets. Also, the combination of high-quality infrastructure, skilled workforce and a dynamic regional business ecosystem make it a worthy investment. Nouveau Monde is targeting commercial operations by 2023.
Dedicated to stringent sustainable development standards, Nouveau Monde is committed to having both its equipment used for mining operations and its ore concentration and processing activities become fully electric within the first five years of production. This operating model, which is the world’s first for an open-pit mine, represents a potential reduction of over 300,000 tons of CO2 emissions over the mine’s lifespan. Notably, Caterpillar has been helping its customers decrease their carbon footprints through machinery and power solutions that minimize greenhouse gas emissions.
This news comes on the heels of
Rio Tinto plc Plc
’s
RIO
announcement that it will deploy the world’s first fully autonomous water truck in partnership with Caterpillar at its $2.6 billion Gudai-Darri iron ore mine in Western Australia’s Pilbara region. Water spraying is a vital part of mining operations and this new technology will enhance productivity by enabling digital tracking of water consumption, while cutting down water wastage. Rio Tinto intends to make Gudai-Darri one of the world’s most technologically advanced mines.
Cutting down mining sector’s carbon emissions is the need of the hour. Day by day, more and more mining companies are exploring options to electrify their mines. The switch from diesel to electricity will also cut costs and boost their license to operate. Electrified mines will require less maintenance and human intervention. The use of automation and the Internet of Things (IoT) will increase as drones, autonomous vehicles and remote-controlled operational systems are rolled out more widely across mining operations.
At Bernstein 37th Annual Strategic Decisions Conference earlier this month, Caterpillar’s CEO Jim Umpleby pointed toward a “long healthy cycle” in mining and strong commodity prices. Umpleby also highlighted that the energy transition has immense potential for Caterpillar in the long haul. The intensifying global focus on shifting from fossil fuels to zero emissions will require huge amount of commodities. This will lead to higher demand for mining equipment. Caterpillar given its focus on energy and emissions reduction will have a competitive edge.
Per a Research and Markets report, the global market for mining equipment, which was estimated at $119 billion in 2020, is projected to witness a CAGR of 6.1% and hit $179.8 billion by 2027. Metal mining is projected to record a 7.6% CAGR and attain $83.5 billion by 2027.
Price Performance
Shares of Caterpillar have surged 68.8% over the past year compared with the
industry
’s rally of 45.1%.
Image Source: Zacks Investment Research
Zacks Rank & Other Stocks to Consider
The company currently has a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Some other top-ranked stocks in the industrial products sector are
Tennant Company
(TNC) and
Encore Wire Corp.
(WIRE). Both of these stocks sport a Zacks Rank #1, at present.
Tennant has an anticipated earnings growth rate of 49.5% for 2021. The company’s shares have gained around 18% year to date.
Encore Wire has an estimated earnings growth rate of 49.5% for the ongoing year. Year to date, the company’s shares have rallied nearly 36%.
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