Sharpening the focus Metso

Metso’s mining, construction, automation and oil and gas businesses have been separated from its pulp, paper and power business to form a ‘new’ Metso that aims to deliver stronger growth and improved profitability. Peter Mercer speaks to Metso’s President and CEO, Matti Kahkonen.

SHARPENING THE FOCUS

AT the end of 2013, Finland’s Metso Corporation, the global supplier of technology and services to the mining, construction, pulp and paper, power and oil and gas industries, completed a demerger into two separate companies. Metso’s pulp, paper and power businesses have been transferred to a new company, Valmet, while the mining, construction, automation and oil and gas businesses remain part of Metso.

Valmet, of course, is not at all a new name in Finnish industry. In fact, Metso itself was created in 1999 through the merger of Valmet, at that time one of the world’s most important paper and board machine manufacturers, and Rauma whose operations were focused on fibre technology, rock crushing and flow control solutions.

So if it made sense to merge the two businesses in 1999, why has Metso’s board decided that they would now be better able to profit from growth opportunities as separate companies? Matti Kahkonen, Metso’s President and CEO, says “Fifteen years ago, putting Rauma and Valmet together created a strong, broadly based company that could effectively compete on the global market but in the years since then both sides of the business have grown through acquisitions and investment and we are confident that they are both now large enough and competitive enough to succeed as separate players in the global market.

They have always been essentially different businesses, with their own core technologies, markets and customers, and as stand-alone companies they will now be able to focus more closely on their respective markets, speed up their strategy implementation, plan more effectively and improve their profitability.

“We believe that our mining, construction and automation business will benefit from the independent governance and strategy that a separate company makes possible. Both Metso and Valmet are now sizeable, globally leading businesses with strong balance sheets, and strengthening their respective cultures, goals and their ability to execute their strategies independently will enable them to realise their full potential in the future.”

Intelligent solutions

The new Metso is a global leader in providing processing equipment and services to its customers in the mining, construction and oil and gas industries. Its focus is on the continuous development of ‘intelligent solutions’ that improve sustainability and profitability, and on growing its services business through its worldwide networks and its deep understanding of its customers’ processes. Headquartered in Helsinki, the company employs around 16,000 people in 50 countries and had a turnover in 2013 of €3.9bn. It operates in two business segments: mining and construction, which delivers minerals processing solutions, crushing and screening equipment and services, and automation, which consists of process automation systems, flow control and services.

Globalisation is continuing to drive up demand for minerals and for construction materials and therefore for the equipment and services for which Metso enjoys a worldwide reputation. But at the same time raw materials and other resources are becoming scarcer and so plants are always looking for new ways to be more efficient in their operations and energy use. It is to meet these demands that Metso is developing its automation and intelligent processes and service solutions. Metso’s flagship automation system for minerals processing and aggregate production is Metso DNA, a scalable system that can be expanded step by step to build a complete plant-wide system that can include distributed control systems, advanced process controls, analysers and information management. Over the years this system has been delivered, for example, to mining customers in Scandinavia, Europe, Russia, Brazil and China.

Indeed one of Metso’s long-standing customers, the Yara Siilinjarvi phosphate mine in Finland, has been boosting its productivity with the Metso DNA automation system since 1979. With accurate measurements and analyses, the plant has been able to optimise both the process and the use of raw materials. Being able to control the entire production chain has increased control accuracy and improved both the quantity and quality of the product of the plant.

“Our automation segment’s process automation solutions are meeting the growing needs of our customer industries to improve process efficiency as raw materials and energy sources become scarcer and costs increase,” explains Matti Kahkonen. ”With embedded automation systems, our machines are becoming more intelligent but we are also now able to offer systems that enable machines to communicate with each other so that the entire process of quarry operation, for example, can be automated. Automation is vital in helping miners to get more out of less, but it also has huge benefits in dramatically improving safety levels by removing operators from the immediate vicinity of the machines and reducing costs by enabling machines to be run from faraway locations with fewer skilled mining experts required on site.”

Metso DNA systems have recently been ordered by SSGPO in Kazakhstan, Codelco El Teniente in Chile and Norilsk Nickel Kolskaya GMK in Russia.

Service across the world

Today services already account for more than 50 per cent of Metso’s net sales, and the new company intends to further strengthen its position by continuing to expand its offer in both parts and services. Metso spare parts are designed in-house and manufactured according to strict design parameters, while its expert field service teams provide on-site support to its customers across the world. Metso also offers a global consulting service to the mining and construction industries through its process pechnology and Innovation division. The particular focus of this division is providing industry with total process integration and optimisation services; these

Katsa Oy

Metso Minerals has been cooperating with Katsa Oy Ltd for decades.

According to Mikko Takaniemi, Driveline Specialist, Metso Mining and Construction, “The communication between ourselves and Katsa’s engineering department works seamlessly, and their technical knowledge is extremely impressive. With Katsa’s gearboxes we have been able to achieve the highest levels of efficiency and reliability in our equipment.”

include optimisation of mining (drilling and blasting), comminution, flotation and dewatering processes with the objective of reducing operating costs, increasing production rates and improving overall process, energy and water efficiency.

“Metso is the leading services provider for the global mining and construction industries and we want to further develop and grow the business through stronger cooperation across our businesses,” says Matti Kahkonen. “Our machines are enormously robust and well-engineered and they last for years, but crushing rock is heavy work and so there is a constant demand for wear parts. This continuous demand of spare and wear parts is crucial in an otherwise cyclical and capital intensive industry. For example after the collapse in worldwide demand after the crisis of 2008, our capital business fell by 70 per cent but our income from services contracted by only 20 per cent.

“But service today includes a lot more than spare parts. We now offer lifecycle service contracts in which we take over the service requirements of our customers’ equipment for extended periods, and we can also help them combine intelligent machines into the optimum integrated site process system. Over all we utilise our deep technological and process know-how to deliver intelligent services solutions that are designed to make a substantial difference to our customers’ businesses over the whole lifecycle of their equipment and processes.”

To drive the growth in its services offer Metso has just appointed a new President of the Services business line in mining and construction. Juha Silvennoinen, formerly with ABB, is now responsible for the development of the company’s services business by strengthening synergies and realising new business opportunities.

Oil and Gas

The demerger gives a new prominence to the company’s oil and gas business. Metso is already one of the largest global suppliers of oil and gas valves and the company sees good opportunities to expand what is already a €600m worldwide business. Metso delivers a wide variety of valves to the chemical and petrochemical industries, including control valves, emergency shutdown and blowdown valves and many other critical automated on-off applications. It has also supplied large quantities of valves, actuators and intelligent controllers to bioethanol and biodiesel plants across the world. Ball, butterfly and control valves from Metso are also performing reliably all over the world in the low temperature, cryogenic and ambient conditions required by the LNG industry. In fact, more than 60 per cent of the world’s LNG flows through Metso’s Neles and Mapag valves.

Drivers for growth in this business include not only the expansion of the LNG industry in the Middle East and Asia Pacific but also the shale gas revolution in the USA.

Global opportunities

However, Metso plans to increase its presence in all its business areas throughout the BRIC countries and in other global growth areas. Last year it acquired, for example, a Chinese steel foundry which will improve its ability to supply wear parts to mining and construction industry customers in China and other markets in Asia Pacific. It also acquired the Chinese construction equipment supplier, Shaorui Heavy Industries, one of the leading mid-market producers of crushing and screening equipment in China, and formed a 50-50 joint venture with LiuGong Group Corp. Ltd to develop the track-mounted crushing and screening business in China.

“We are also looking very closely at further opportunities in Sub-Saharan and South Africa, regions where we are already wellestablished with more than 1400 employees working in the continent,” says Matti Kahkonen. “There are huge natural resources in Africa, which means a growing demand for our mining equipment, and at the same time the region is having to develop its infrastructure – roads, ports, terminals and so on – very quickly, so our construction machinery is needed there. We believe that the more tightly focused ‘new’ Metso will be better able to build on these and all other global opportunities to achieve faster growth and improved profitability in the years to come.” n