Caterpillar at Deutsche Bank Conference Notes

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Denise Johnson – Group President, Resource Industries

We are seeing a good solid recovery in mining

“So, I talked a little bit about the recovery. We are seeing a good solid recovery from a really low level. If you see on the left, certainly the commodity dollar index, as the last chart has shown with it returning here in 2017. We are also seeing that our equipment is being utilized at fairly high rates. And you see the chart on the right hand side which really shows parked truck utilization overall

Mining companies are forecasting CapEx to increase

“We are also seeing that the mining companies are forecasting CapEx to increase, I’ll say, although they have been very stingy with those CapEx dollars. Wherever possible, they are looking to maintain the equipment that they have. They are rebuilding more than ever. ”

High level of interest in autonomous fleets

“One area that we’re very heavily focused on is technology, and I talked about that a little bit. One highlight that I’m very proud of is the fact that we are a supplier in production on autonomous fleets. We have two fleets in production in Australia and we have a number of customer contracts that have been signed for additional autonomous fleets to be deployed, one in the oil sands, one in Brazil, and another in the U.S. So, I will say in general, there’s a high level of interest in autonomy, mainly for the benefit that it provides for productivity.”

Technology controlling mines has changed

“So, if you look at what’s happening in mining, certainly the industry itself is poised to grow. The mining methods of the past have changed. And where we’re controlling mines from for the future from pit support is located in office buildings instead of the mine sites. So, recognizing the technology needs to be — the solution step that’s used and leveraged to a larger degree is something that we definitely see and it’s getting a lot of pull for, and I think something that really is the game changer in this industry.”

Iron ore customers are not pulling off production even at lower prices

“We are watching that really closely. I would say, in general though, most of our iron ore customers have been extremely focused on lowering their costs. So, even though pricing is going lower, they are still at a point where they are not looking to pull off from production. So, it hasn’t impacted us to a large degree. Now, I would say that there are few of those customers that are — we had thought were going to order trucks and had decided to delay the order. So, it’s just a delay. But for the most part, they haven’t — it just hasn’t stopped them from to normal activity.”

One big customer trying to be fully autonomous by 2025

“I was talking to a customer last week about autonomy and they have a goal to be fully autonomous on every mine site by 2025. And they have thousands of pieces of equipment. So, you’ve got these bold goals being placed out there. So, clearly, the momentum is moving. We’re getting calls every day from mining customers asking for us to come in and talk to them about what we can do together. So, there is certainly a pull there. And so, it will happen, it’s just how fast. There is — it still is the technology that’s evolving. And we do have a lot of tech companies out there that are also trying to fill that space. So, it will be interesting to see how it evolves, but it will clearly go there.”